U.S. securities regulators on Wednesday urged lawmakers not to pass a bill that would create a new legal framework for digital currencies, saying it would undermine existing legal precedents and expose capital markets to "incalculable risks."
The U.S. House of Representatives is expected to consider the Republican-sponsored Financial Innovation and Technology Act for the 21st Century later Wednesday, which will go to some extent determine which agencies have jurisdiction over which digital assets. Backers of the bill in Congress say it will provide regulatory clarity and help promote the industry.
The legislation faces an uncertain fate in the U.S. Senate, but at the same time, the Securities and Exchange Commission said it could approve applications for spot Ethereum ETFs, giving the industry an unexpected boost.
But Securities and Exchange Commission Chairman Gary Gensler said in a statement that the bill "will create new regulatory gaps, undermine decades-old precedents for investment contract supervision, and expose investors and capital markets to immeasurable risks."
The bill is supported by cryptocurrency supporters and industry groups,pooyanThey have long been using the SEC's Gensler See it as an obstacle to the wider use of digital assets.
Gensler noted high-profile prosecutions, fraud cases, bankruptcies and failures, insisting that cryptocurrencies should be subject to the same legal constraints as other assets.
He said in a statement on Wednesday that under the bill, investment contracts recorded on blockchain will no longer be considered securities, depriving relevant investors of the protections they receive under securities laws.
Among other criticisms, Gensler said the bill would allow issuers of cryptocurrency investment contracts to prove that their products are digital goods not regulated by the SEC, giving the agency only 60 days to question this.
