The U.S. House of Representatives on Wednesday passed a bill establishing a new legal framework for cryptocurrencies, despite an unprecedented warning from the Securities and Exchange Commission (SEC) about potential financial risks.
The Republican-sponsored 21st Century Financial Innovation and Technology Act passed the House with a bipartisan vote of 279 to 136. However, it remains unclear whether the Senate will consider the bill, according to media reports.
Supporters in Congress argue the bill would provide regulatory clarity and encourage growth in the industry.
The House approval comes after the SEC indicated it may approve an application for a spot Ethereum exchange-traded fund, coming as a surprise boost to the industry.
Why is the US SEC opposed to the cryptocurrency bill?
But SEC Chairman Gary Gensler warned that the bill would “create new regulatory gaps, undermine decades of precedent for oversight of investment contracts, and expose investors and capital markets to untold risks.”
Citing high-profile prosecutions, fraud cases, bankruptcies and failures, Gensler argues that cryptocurrencies should be subject to the same laws as other assets. He argued that under the bill, investment contracts recorded on the blockchain would no longer be considered securities and would lose investor protections under securities laws.
Gensler also criticized the bill for allowing issuers of crypto investment contracts to self-certify their products as digital goods and giving the SEC just 60 days to challenge those claims.
Meanwhile, the bill has the backing of cryptocurrency advocates and industry groups who have long viewed Gensler’s SEC as an obstacle to the broader adoption of digital assets.
What is the US Cryptocurrency Bill?
The bill could change the regulatory environment for the crypto industry by classifying cryptocurrencies as commodities rather than securities. It also gives primary regulatory responsibility to the Commodity Futures Trading Commission (CFTC) and weakens the SEC's oversight. The digital asset industry has long complained that the SEC's existing disclosure regime doesn't work for them.
The bill would also create a customized disclosure and registration regime for digital asset companies, but is unlikely to pass in the Senate, where several senators have proposed their own bills to overhaul cryptocurrency regulation.
The Donald Trump presidential campaign and cryptocurrency
Earlier this week, President Donald Trump's campaign announced that it would begin accepting cryptocurrency donations in an effort to build a “crypto army” in time for Election Day. The campaign launched a fundraising page where federally recognized donors can donate to the campaign committee using any cryptocurrency accepted on the Coinbase exchange.
The announcement underscores Trump's message as a crypto-friendly candidate, appealing to young, male voters who are increasingly interested in digital assets. The campaign accepts popular cryptocurrencies such as Bitcoin, Ether and USD Coin, as well as low-value coins such as Shiba Inu Coin and Dogecoin.
(Quoted from Reuters)
First Edition: May 24, 2024 | 10:13 AM IST
