Crypto Analyzer

SEC Chair Gensler Opposes FIT21 Act, White House Does Not Plan to Veto

Chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, has publicly voiced his strong opposition to the Financial Innovation and Technology for the 21st Century (FIT21) Act. This legislation, set to be voted on by the US House of Representatives, aims to provide regulatory clarity to the crypto industry. However, Gensler argues that the bill may weaken consumer protections in the crypto market.

The Biden administration has also expressed its disapproval of the bill but remains open to collaborating with Congress to establish a balanced regulatory framework for digital assets. Gensler’s concerns revolve around the potential regulatory gaps the FIT21 Act could create and the risks posed to investors and capital markets.

Gensler highlights that the bill could allow blockchain-based investment contracts to evade SEC oversight by self-certifying as decentralized products. He warns that this could lead to reduced protections for investors and could undermine the regulatory authority of the SEC. Additionally, Gensler criticizes the abandonment of the Howey Test, a vital tool for determining securities status, as well as the exclusion of crypto asset trading platforms from being classified as exchanges.

Despite Gensler’s dissent, the FIT21 Act has garnered support from members of the US Congress and the crypto community. Congressman French Hill, the Chairman of the Subcommittee on Digital Assets, Financial Technology, and Inclusion, believes that the bill would provide necessary securities protections. Leading crypto companies like Coinbase, Circle, Kraken, Gemini, and advocacy groups have urged lawmakers to back the legislation citing the need for regulatory clarity in the industry.

As the bill awaits the critical vote in the House of Representatives, the White House has indicated that it will not veto the legislation if it passes while maintaining its opposition to it. This vote is poised to be a significant moment in crypto legislation and could have far-reaching implications for the industry.