SEC’s Gensler Says House Bill Would ‘Undermine’ Regulator’s Crypto, Capital Markets Oversight

SEC Chair Gary Gensler voiced his concerns about the Financial Innovation and Technology for the 21st Century Act, stating that it would undermine the U.S. Securities and Exchange Commission’s (SEC) oversight of cryptocurrencies and capital markets. Gensler argued that the bill would create regulatory gaps, putting investors and markets at risk. The legislation, a joint effort by the House Agriculture Committee and the House Financial Services Committee, aims to clarify the regulatory roles of the SEC and the Commodity Futures Trading Commission (CFTC) regarding crypto assets. It introduces the term “digital commodity” for assets that do not meet the bill’s definition of a security, placing them under the jurisdiction of the CFTC. Gensler criticized FIT21 for ignoring established regulatory precedent, potentially exposing investors to excessive risk, and disregarding the Howey Test. He emphasized that current securities laws were implemented to protect consumers and argued that the crypto industry has failed to comply with these regulations. Gensler raised concerns about the time frame for asset assessment and the bill’s definition of a digital commodity, highlighting the potential harm to the broader capital markets. The bill is expected to be voted on by the House of Representatives, but its path through the Senate is uncertain, making its passage into law this year unlikely.