US House of Representatives passes bill to regulate digital currencies

The US House of Representatives passed a bill to establish a new legal framework for digital currencies. The Republican-sponsored Financial Innovation and Technology for the 21st Century Act was approved with a bipartisan vote of 279-136. Proponents argue that the bill will offer regulatory clarity and promote the growth of the digital currency industry. However, whether the Senate will take up the measure remains to be seen.

The US Securities and Exchange Commission (SEC) has raised significant concerns despite the House’s approval. SEC Chair Gary Gensler warned that the bill could create regulatory gaps and undermine long-standing oversight practices, posing risks to investors and capital markets in the US. Gensler pointed out that under the bill, investment contracts recorded on a blockchain would no longer be considered securities, stripping investors of protections under existing securities laws.

Why does it matter?

Supporters from the crypto industry, who view Gensler’s SEC as a barrier to broader adoption of digital assets, welcomed the bill. They argue it addresses necessary regulatory updates for the evolving industry. Nonetheless, Gensler highlighted the bill’s provision allowing crypto issuers to self-certify their products as digital commodities, which could limit SEC oversight and complicate regulatory enforcement.

The SEC’s recent indication that it may approve applications for spot ether exchange-traded funds has boosted the industry. Still, the debate over the appropriate regulatory approach for digital currencies continues, with significant implications for the future of financial innovation and investor protection.