The SEC chief said the new virtual currency law would undermine his agency's work.
Hours before the scheduled vote on Wednesday (May 22), Securities and Exchange Commission (SEC) Chairman Gary Gensler released a statement slamming the Financial Innovation and Technology for the 21st Century Act (FIT 21).
Gensler said the bill would “create new regulatory gaps, undermine decades of precedent on the oversight of investment contracts, and expose investors and capital markets to untold risks.” Stated.
He went on to list a number of problems with the bill. For example, he said it would remove investment contracts recorded on blockchain from the legal definition of a security and from the protection of most federal securities laws.
“Furthermore, by removing this set of investment contracts from the statutory list of securities, this bill would address repeated court rulings that many crypto assets are offered and sold as securities under current law. “This suggests that crypto market participants are trying to deny it,” Gensler added.
The bill would allow companies to self-certify that they are issuing “digital goods” and give them 60 days to determine whether their assets meet the bill's definition of digital goods. It is given to the SEC.
“There are currently more than 16,000 crypto assets in existence. Given staff resource limitations and the bill's lack of new resources, the SEC will review and challenge more than a fraction of those assets.” It is difficult to imagine filing a complaint,” the committee chairman said.
“As a result, a large portion of the market may avoid even the limited SEC oversight envisioned in the Crypto-Asset Securities Act.”
Introduced last summer, FIT21 establishes federal requirements for digital assets, gives the Commodity Futures Trading Commission (CFTC) new jurisdiction over digital products, and provides additional jurisdiction over digital assets when managing them as part of an investment contract. clarified the role of the SEC.
The bill also establishes a process for allowing secondary market trading of digital products that were initially offered as part of an investment contract and imposes requirements on entities to register with the CFTC or SEC, according to the release.
The cryptocurrency sector has long sought regulatory clarity from the Washington government, and this bill helped the industry achieve that goal, PYMNTS reported when the bill was introduced.
FIT21 will determine whether virtual currencies are commodities or securities and allocate oversight appropriately between the CFTC and the SEC.
Even if the bill passes the House, many observers say it does not have a clear path to the Senate and may not become law this year.
