Regulation
SEC’s Gensler Criticizes Cryptocurrency Regulation Bill Ahead of Vote
Securities and Exchange Commission Chairman Gary Gensler. Image: Kevin Dietsch via Getty Images.
SEC Chairman Gary Gensler opposed the Financial Innovation and Technology for the 21st Century Act (FIT21) in a declaration on Wednesday.
The bill, which has garnered support from leading Republicans and major cryptocurrency companies, is expected to be voted on in the House of Representatives, while its future in the Senate remains uncertain.
Gensler’s criticism centers on the risk that the bill could undermine the SEC’s ability to protect investors and the integrity of U.S. capital markets by altering the classification of cryptocurrencies and decreasing regulatory oversight.
“[FIT 21] It would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, exposing investors and capital markets to immeasurable risk,” Gensler said.
The FIT21 Act, introduced in July 2023, seeks to establish clear federal guidelines for digital asset markets and outline the roles of the SEC and the Commodity Futures Trading Commission (CFTC) in regulating cryptocurrencies.
Gensler said the bill could erode the Howey test, a cornerstone in determining investment contracts, and allow crypto firms to evade SEC regulation by self-certifying their products as “decentralized” digital commodities.
Additionally, the FIT21 Act’s exclusion of cryptocurrency trading platforms from the definition of exchanges is seen by Gensler as a move that could undermine investor protection.
The White House also released a statement Wednesday opposing passage of the bill.
“H.R. 4763 in its current form does not have sufficient protections for consumers and investors who engage in certain digital asset transactions,” Executive Office of the President She said on Wednesday.