In a statement released on Wednesday, US Securities and Exchange Commission (SEC) Chairman Gary Gensler expressed his strong opposition to the Financial Innovation and Technology for the 21st Century Act, also known as the FIT21 Act.
according to a Transcript published by SECGensler believes the proposed legislation, H.R. 4763, would weaken regulation and dismantle precedents for investment contract oversight – which would have serious consequences. They said:
[The legislation] This 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’s primary concern is that FIT21 could allow crypto firms to self-certify their investments and products under a “special class” of “decentralized” and “digital commodities,” thereby avoiding SEC scrutiny. He argues that the SEC’s ability to challenge these self-certifications would be limited by resource constraints, allowing a large portion of the crypto market to remain unregulated. He added:
Furthermore, by removing this set of investment contracts from the statutory list of securities, the bill means that courts have repeatedly ruled – but crypto market participants have attempted to deny – that many crypto assets are illegal under existing law. Are being offered and sold as securities.
“Rules not vague, but unfollowed”
Furthermore, Gensler pointed out that the bill excludes crypto trading platforms from the definition of an exchange and eliminates historically tested frameworks such as the Howey test, which he believes will ultimately put investors at risk. He emphasized that the crypto industry’s record of failures, fraud, and bankruptcy is not due to a lack of regulations or unclear rules, but because many players in the crypto industry do not comply with existing regulations.
Despite Gensler’s concerns, FIT21 has received support from 60 crypto organizations, including Gemini, Kraken, Coinbase, and the Digital Currency Group. These organizations have signed a letter stating that digital asset firms are currently bound by securities laws created nearly a century ago. The bill, led by the US Republican Party, aims to hand over more responsibility to the Commodity Futures Trading Commission (CFTC) in regulating the larger crypto ecosystem.
Notable supporters of the bill include Republican candidate and former US President Donald Trump and his advisers, who believe FIT21 could provide a more comprehensive approach to regulating the crypto industry. The US House of Representatives plans to vote on the bill later on Wednesday.
This news comes after recent reports that the US Senate has joined hands with the House of Representatives Cancel the SEC’s controversial crypto policyThe policy required companies holding customer cryptocurrencies to record them on their balance sheets, which could have significant capital implications for banks working with crypto clients.
Just yesterday Ethereum (ETH) is up nearly 21% within 24 hours after analysts began suggesting that the coin could soon see Acceptance of your own spot exchange-traded funds,
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