HomeCryptoGary Gensler, SEC Chair, criticizes cryptocurrency market legislation before House vote

Gary Gensler, SEC Chair, criticizes cryptocurrency market legislation before House vote

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SEC Chair Gensler Opposes FIT21 Act, Warns of Risks to Investors and Capital Markets

SEC Chair Gary Gensler Takes Stand Against FIT21 Act, Warns of Immeasurable Risk to Investors

In a bold move, U.S. Securities and Exchange Commission Chair Gary Gensler publicly expressed his dissent against the Financial Innovation and Technology for the 21st Century Act, also known as the FIT21 Act. Gensler’s statement, released on Wednesday, warned of the potential dangers posed by the proposed legislation.

According to Gensler, the FIT21 Act, also known as H.R. 4763, could create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts. This, in turn, could put investors and capital markets at immeasurable risk.

One of Gensler’s main concerns is that the act undermines the classification of crypto assets as investment contracts, which would remove them from the SEC’s oversight and hinder investor protection efforts. He argued that FIT21 could allow crypto firms to self-certify their investments as “decentralized” and under a “special class” of “digital commodities,” thereby avoiding scrutiny by the SEC.

Gensler highlighted the potential risks of this self-certification process, stating that it could undermine investor protection not only in the crypto space but also in the broader $100 trillion capital markets. He raised concerns about the possibility of perpetrators of pump and dump schemes and penny stock pushers evading securities laws by labeling themselves as crypto investment contracts.

The FIT21 Act, led by the U.S. Republican Party, aims to regulate the larger crypto ecosystem and entrust more responsibility to the Commodity Futures Trading Commission. Despite this, Gensler and other critics argue that the bill excludes crypto trading platforms from the definition of an exchange and eliminates historically tested frameworks like the Howey test, ultimately putting investors at risk.

While 60 crypto organizations, including Gemini, Kraken, Coinbase, and the Digital Currency Group, have signed a letter in support of the bill, Gensler remains steadfast in his opposition. He emphasized that the failures, frauds, and bankruptcies in the crypto industry are not due to a lack of rules but rather because many players do not adhere to the existing regulations.

As the U.S. House of Representatives plans to vote on FIT21 later on Wednesday, the debate over the future of crypto regulation continues to intensify. With key figures like former President Donald Trump and House Speaker Nancy Pelosi weighing in on the issue, the outcome of the vote remains uncertain.

In the midst of this regulatory battle, one thing is clear: the crypto industry is at a crossroads, and the decisions made in the coming days could have far-reaching implications for investors and the broader financial markets.

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