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 crucial cryptocurrency regulation bill.
In a notice 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 lacks adequate protections 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 FIT21 could create new regulatory loopholes and potentially destabilize US capital markets if enacted.
Chair Gensler cited a report from Chainalysis in January to support his argument that widespread noncompliance by cryptocurrency firms has led to a surge in fraud, bankruptcies, failures, and misconduct. However, the analytics platform itself reported that revenue from illicit activities involving cryptocurrencies significantly decreased in 2023.
“The failures, frauds, and bankruptcies within the crypto industry are not due to a lack of rules or unclear regulations,” stated the SEC chair. “They occur because many players in the crypto industry choose not to abide by the rules. We should prioritize protecting the investing public over facilitating the business models of noncompliant firms.”
H.R. 4763, scheduled for a vote in the House on May 22, aims to provide clarity on how the SEC and Commodity Futures Trading Commission regulate digital assets. 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 take the risk of facing SEC enforcement actions.
Additionally, the White House expressed its readiness 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 intention to veto H.J.Res. 109, a joint resolution aimed at overturning an SEC accounting rule pertaining to banks’ handling of cryptocurrencies.
The FIT21 bill is expected to be voted on by all House members on May 22. Currently, Republican lawmakers hold a slim majority in the chamber, but 21 Democrats previously voted in favor of H.J.Res. 109 on May 8. Representatives Wiley Nickel, a Democrat, and French Hill, a Republican, have publicly announced their intention to vote in favor of FIT21.
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