Regulation
The cryptocurrency regulation bill is expected to pass the House
The Financial Technology and Innovation Act for the 21st Century it is expected to pass the House of Representatives today after previously clearing a procedural hurdle on a 204-203 party-line vote. The bill was first proposed in July 2023 and approved by jurisdictional committees on May 6.
Rep. Patrick McHenry, R-North Carolina, and the chairman of the House Committee on Financial Services, spoke in defense of the FIT Act today at the Investment Company Institute 2024 Leadership Summit, a bill of which he is a sponsor.
The act would create a regulatory framework for the digital assets industry and has been criticized by Gary Gensler, chairman of the Securities and Exchange Commission. During the conference, McHenry sarcastically called Gensler’s criticisms “shocking,” as Gensler is known to be a harsh critic of the cryptocurrency industry in general.
If passed, the bill, also known by its bill number, H.R. 4763, would give the Commodity Futures Trading Commission regulatory authority over decentralized digital assets, as well as the cash or spot market for digital commodities. Decentralized is defined in the bill as a crypto asset in which “no person has unilateral authority to control the blockchain or its use, and no issuer or affiliated person has control of 20% or more of the digital asset or of the voting power of the digital asset”. resource.”
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The SEC would regulate digital securities that are not decentralized, with additional exceptions for those that limit annual sales or access by non-accredited investors. If the bill passes, all regulation for digital assets would be joint regulation by the SEC and the CFTC.
Gensler today identified some potential problems with the bill in his statement. He noted that the bill allows cryptocurrency issuers to self-certify that they are decentralized and gives the SEC only 60 days to review and challenge that certification. Gensler said the SEC does not have the staff needed to review the large volume of digital assets. He also suggested that “pump and dump schemes and penny stock dealers” could falsely claim digital asset status to avoid regulation and the SEC would only have 60 days to review it.
Rep. Sean Casten, D-Illinois, proposed an amendment to the FIT bill that would have extended this deadline to 90 days, but it was not accepted.
Gensler added that the existing rules are clear enough, it’s just that the cryptocurrency industry doesn’t want to follow them: “The cryptocurrency industry’s record of failures, frauds and failures is not because we don’t have rules or because the rules don’t are clear. It’s because many players in the cryptocurrency industry don’t play by the rules. We should make the political choice to protect the investing public instead of facilitating the business models of non-compliant companies.”
McHenry responded during an interview with ICI CEO Eric Pan that “right now we don’t have a definition of a digital asset” under the law and that the bill will provide regulatory clarity for the industry. McHenry added that “it is the Gensler regime that has made things less certain” and he will continue to focus on “talking to legislators who have actual votes” on the bill.
The White House stated this in a statement that “the Administration opposes passage of H.R. 4763, which would affect the regulatory structure for digital assets in the United States,” suggesting that a veto of the bill would be likely if it reaches President Joe Biden.
During debate on the bill, Rep. Stephen Lynch, D-Massachusetts, the Democrat on the House Financial Services Committee’s digital assets subcommittee, described the act as one of the “three worst bills I’ve ever seen.” seen advancing to the House floor. ” Other opponents of the bill explained that it does not address the role of cryptocurrencies in financing illicit activities and leaves much of cryptocurrency enforcement to the CFTC, which traditionally has little experience working with intangible assets or retail markets.
tags: Crypto assets, Gary Gensler, SEC