Benzinga - by Murtuza Merchant, Benzinga Staff Writer.
In a surprising turn of events, the White House announced today that it will not veto the Financial Innovation and Technology for the 21st Century Act (FIT21), a bill that would significantly impact how digital assets are regulated in the United States.
What Happened: The administration emphasized its eagerness to collaborate with Congress to develop a comprehensive and balanced regulatory framework for digital assets.
In a statement, the administration outlined its opposition to H.R. 4763, citing a lack of sufficient protections for consumers and investors engaged in digital asset transactions.
“The Administration is eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, which will promote the responsible development of digital assets and payment innovation and help reinforce United States leadership in the global financial system,” the statement read.
Administration’s Position On FIT21 Despite opposing the passage of H.R. 4763, the White House indicated that it would not veto the bill. Instead, the administration expressed its intention to continue collaborating with Congress to enhance the legislation.
“H.R. 4763 in its current form lacks sufficient protections for consumers and investors who engage in certain digital asset transactions. The Administration looks forward to continued collaboration with Congress on developing legislation for digital assets that includes adequate guardrails for consumers and investors while creating the conditions needed for innovation,” the statement continued.
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Background On Gary Gensler’s Criticism Securities and Exchange Commission (SEC) Chair Gary Gensler has been a vocal critic of the FIT21 bill, arguing that it would undermine decades of legal precedent and create regulatory gaps.
“The Financial Innovation and Technology for the 21st Century Act (‘FIT 21’) would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk,” Gensler said.
Gensler highlighted that the bill ignores established precedents for regulating investment contracts and could expose investors to significant risks without proper disclosures.
He also pointed out that the bill’s provisions for companies to self-certify as “digital commodities” would put immense pressure on the SEC to assess these certifications within an impractically short timeframe, given the vast number of digital assets in circulation.
Potential Impact And Industry Reactions The FIT21 bill aims to provide regulatory clarity and consumer protections for the digital asset ecosystem by leveraging the capabilities of both the SEC and the Commodity Futures Trading Commission (CFTC). The bill’s supporters argue that it is a necessary step to avoid future incidents like the collapse of FTX and to promote innovation in the U.S. financial system.
However, critics, including Gensler, believe that the bill could lead to increased risks for the American public by allowing companies to circumvent SEC oversight through decentralized networks. The House of Representatives is expected to vote on the bill later today, though it faces an uncertain path in the Senate.
Looking Ahead: Benzinga’s Future Of Digital Assets Event The implications of the FIT21 bill and other regulatory developments in the digital asset space will be further explored at Benzinga’s Future of Digital Assets event on Nov. 19.
This event will bring together industry leaders, investors, and policymakers to discuss the evolving role of digital assets in the global financial landscape.
Attendees will gain valuable insights into how these regulatory changes could shape the future of cryptocurrency investments and innovation.
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