United States President Joe Biden and Gary Gensler, the Chair of the Securities and Exchange Commission (SEC), have issued statements ahead of the House of Representatives’ vote on a crucial 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 proposed legislation “does not provide adequate safeguards for consumers and investors involved in certain digital asset transactions.” This stance from the White House came shortly after Chair Gensler released a statement warning that if FIT21 is passed, it would “create new regulatory loopholes” and pose a threat to the stability of the US capital markets.
Chair Gensler referred to a report by Chainalysis from January to support his claim that “widespread noncompliance by crypto firms has led to fraud, bankruptcy, failures, and misconduct.” However, the analytics platform reported that revenue generated from illicit activities related to cryptocurrencies had significantly decreased in 2023.
“The failures, frauds, and bankruptcies within the crypto industry are not due to the absence or ambiguity of regulations,” stated the SEC chair. “It is because many participants in the crypto industry choose not to adhere to the rules. We should prioritize protecting the investing public rather than facilitating the business models of noncompliant firms.”
H.R. 4763, which is 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 towards digital assets. Industry leaders and lawmakers have raised concerns about the lack of regulatory clarity in the crypto space, which has prompted some companies to leave the United States or operate at the risk of facing SEC enforcement actions.
The White House also expressed its willingness to collaborate with Congress in developing an alternative bill that establishes a regulatory framework for cryptocurrencies. The statement indicated that President Biden would not veto the FIT21 bill if it is passed, unlike his stance on H.J.Res. 109, a joint resolution aimed at overturning an SEC accounting rule concerning banks’ handling of cryptocurrencies.
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 announced their intention to vote in favor of FIT21.
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