U.S. securities regulators on Wednesday urged lawmakers to reject legislation designed to establish a new legal framework for digital currencies, warning that it could undermine existing legal precedent and put capital markets at “immeasurable risk.” .
The U.S. House of Representatives is set to consider the Republican-sponsored 21st Century Financial Innovation and Technology Act, which aims to clarify the jurisdiction of various agencies over digital assets. Supporters of the bill argue it will foster industry growth by providing regulatory clarity.
Despite an uncertain future in the U.S. Senate, the bill was announced just as the U.S. Securities and Exchange Commission (SEC) is expected to approve applications for a spot Ether exchange-traded fund, giving the cryptocurrency industry a surprising boost.
SEC Chairman Gary Gensler strongly opposed the bill, saying it “would create new regulatory gaps and undermine decades of precedent on the oversight of investment contracts, putting investors and capital markets at immeasurable risk.” expressed opposition.
The bill has gained support from cryptocurrency advocates and industry groups who see Gensler’s SEC as a barrier to widespread adoption of digital assets. But Gensler has consistently argued that cryptocurrencies should be regulated under the same laws as other assets, citing numerous high-profile prosecutions, fraud cases, bankruptcies and failures within the sector.
In a statement Wednesday, Gensler emphasized that under the proposed legislation, investment contracts recorded on the blockchain would no longer be classified as securities, depriving investors of the protections provided by securities laws. He also criticized a provision that allows issuers of cryptocurrency investment contracts to self-certify their products as digital products not subject to SEC oversight, giving the agency only 60 days to challenge such certification.
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