United States President Joe Biden and Securities and Exchange Commission (SEC) Chair Gary Gensler have issued statements ahead of the House of Representatives’ vote on a significant piece of legislation that will impact the regulation of cryptocurrencies.
In a notice released on May 22, the Biden administration expressed its opposition to the passing of H.R. 4763, also known as the Financial Innovation and Technology for the 21st Century (FIT21) Act. The administration argued that the bill “does not provide adequate protection for consumers and investors involved in certain digital asset transactions.” The White House’s position was announced shortly after Chair Gensler released a statement warning that the passage of FIT21 could “create new regulatory loopholes” and potentially jeopardize the stability of the US capital markets.
To support his claim, Gensler referenced a January report by Chainalysis, which highlighted “widespread noncompliance” within the crypto industry, leading to instances of fraud, bankruptcy, failure, and misconduct. However, the analytics platform itself reported a significant decrease in revenue from illicit activities involving cryptocurrencies in 2023.
“The failures, fraud, and bankruptcies in the crypto industry are not due to a lack of rules or ambiguity in the existing regulations,” stated the SEC chair. “They are a result of many players in the crypto industry choosing not to abide by the rules. Our priority should be to protect the investing public rather than facilitate the operations of noncompliant firms.”
H.R. 4763, scheduled for a vote in the House on May 22, aims to clarify the regulatory approach of the SEC and the Commodity Futures Trading Commission regarding digital asset regulation. Many industry leaders and lawmakers have argued that the lack of regulatory clarity in the crypto space has prompted some companies to leave the United States or remain but face potential SEC enforcement actions.
The White House also expressed its willingness to collaborate with Congress to develop an alternative bill that establishes a regulatory framework for cryptocurrencies. The statement implied that President Biden would not veto the FIT21 bill if it were to pass, unlike his stance on H.J.Res. 109, a joint resolution aimed at overturning an SEC accounting rule on crypto handling by banks.
The FIT21 bill is expected to be voted on by all House members on May 22. Although Republican lawmakers currently hold a slim majority in the chamber, 21 Democrats previously voted in favor of H.J.Res. 109 on May 8. Representatives Wiley Nickel and French Hill, a Democrat and a Republican respectively, have publicly stated their intention to vote in favor of FIT21.
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