The U.S. House of Representatives approved a bill on Wednesday aimed at establishing a new legal framework for digital currencies, despite a cautionary statement from the U.S. securities regulator about potential financial risks associated with the legislation.
The Financial Innovation and Technology for the 21st Century Act, sponsored by Republicans, passed in a bipartisan vote of 279-136. It remains uncertain whether the Senate will consider the measure.
Supporters of the bill in Congress argue that it will bring regulatory clarity and support the growth of the digital currency industry.
The House’s decision coincides with signals from the U.S. Securities and Exchange Commission (SEC) indicating a likely approval of applications for spot Ether exchange-traded funds, which has been seen as a positive development for the industry.
However, SEC Chair Gary Gensler expressed concerns in a statement, suggesting that the bill “would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk.
The bill received backing from cryptocurrency supporters and industry organizations, who have criticized Gensler’s SEC for hindering the wider adoption of digital assets. Gensler has consistently argued that cryptocurrencies should be subject to the same regulations as traditional assets, citing high-profile prosecutions, fraud cases, bankruptcies, and failures.
In his statement on Wednesday, Gensler highlighted that under the bill, investment contracts recorded on a blockchain would no longer be classified as securities, thus depriving investors of protections under securities laws.
Additionally, Gensler raised concerns that the bill would allow issuers of crypto investment contracts to self-certify their products as digital commodities exempt from SEC oversight, providing the agency with only a 60-day window to challenge such certifications.