On Wednesday, the U.S. House of Representatives passed legislation designed to establish a new regulatory framework for digital currencies, despite warnings from the U.S. Securities and Exchange Commission (SEC) about potential financial risks. The Financial Innovation and Technology for the 21st Century Act, sponsored by Republicans, was approved with bipartisan support in a 279-136 vote. It remains uncertain whether the Senate will consider the bill.
However, SEC Chair Gary Gensler criticized the bill, stating it “would introduce new regulatory loopholes and weaken longstanding precedents in the regulation of investment contracts, thus exposing investors and the capital markets to considerable risks.”
Despite the prominence of high-profile prosecutions, instances of fraud, bankruptcies, and failures within the cryptocurrency space, Gensler has consistently argued that cryptocurrencies should be regulated under the same laws as other financial assets. He noted in his Wednesday statement that under the new bill, investment contracts that are recorded on a blockchain would not be classified as securities, which would strip protections afforded by securities laws to investors.
