Washington (TIP)- The US House of Representatives passed a landmark bill on Wednesday that aims to establish a new regulatory framework for digital assets, setting the stage for a potential showdown with the Securities and Exchange Commission (SEC). The “Financial Innovation and Technology for the 21st Century Act,” passed with bipartisan support in a 279-136 vote, seeks to clarify the legal status of cryptocurrencies and foster industry growth. However, the bill faces an uncertain future in the Senate and drew sharp criticism from SEC Chair Gary Gensler, who warned it could expose investors to “immeasurable risk.”
Supporters of the bill, primarily Republicans, argue that existing regulations are outdated and hinder innovation in the burgeoning crypto sector. They contend the legislation would provide much-needed clarity and attract investment. The House vote comes at a pivotal moment for the crypto industry, as the SEC appears poised to approve applications for spot ether exchange-traded funds (ETFs), a move that has boosted market sentiment.
However, in an unusual rebuke, Gensler issued a statement expressing deep concerns about the bill’s potential consequences. He argued it would “create new regulatory gaps” by exempting certain crypto investment contracts from securities laws, leaving investors vulnerable to fraud and manipulation.
Gensler, who has taken a tough stance on the crypto industry during his tenure, reiterated his belief that digital assets should be subject to the same rules and investor protections as traditional financial instruments. He criticised the bill for allowing crypto issuers to self-certify their products as commodities, potentially circumventing SEC oversight.
The bill’s passage highlights the ongoing tension between crypto proponents and regulators grappling with the novel challenges posed by digital assets. Whether the Senate will take up the bill and whether the SEC will mount a legal challenge remain to be seen.
Shardeum Cofounder Nischal Shetty commented, “The FIT21 Act is a huge win for the Web3 ecosystem. By offering regulatory clarity and fostering innovation, this legislation has the potential to drive wider crypto adoption and expand the Web3 landscape. The US is taking a crucial step towards integrating crypto assets with traditional markets, a move that India should closely consider.”
“To capitalise on this momentum, it’s vital to focus on growing the Web3 ecosystem in India. This includes educating the youth about Web3, increasing the number of developers working on Web3 products, and creating more career opportunities in this space. Developing consumer dApps tailored for the Indian market will be essential. With the clarity and support provided by initiatives like FIT21, we can expect a significant boost in adoption, which will naturally lead to better tax laws and regulatory frameworks,” he added.
Meanwhile, Avinash Shekhar, Cofounder & CEO, Pi42 said, “Today’s passage marks a watershed moment for the crypto industry. The FIT21 Act is seen as a crucial step towards providing the regulatory clarity needed to support the growth and maturation of the digital asset ecosystem in the US while protecting consumers and maintaining market integrity. This is a massive win for crypto considering it clarifies the roles of the SEC and CFTC in regulating crypto. ETH surges on ETF hopes. $231M floods exchanges this week, short squeeze sends ETH price up 22%, with 9,300 ETH being liquidated on the short side over a 48-hour period.”