Legislation seeking to limit the Securities and Exchange
Commission’s (SEC) authority over digital assets was vetoed by President Joe
Biden after passing in the House and Senate with bipartisan support.
Biden said his decision was based on concerns the resolution might
constrain regulators’ ability to set guidelines for the cryptocurrency
industry.
The Financial Innovation and Technology for the 21st Century
(FIT21) Act (H.R. 4763) sought to end the SEC’s special rules for custodians of
digital assets. Both the banking industry and the digital asset marketplace
expressed support for the bill.
Congress voted 279-136 to approve the bill, with 208
Republicans and 71 Democrats casting favorable votes.
“FIT21 provides the regulatory clarity and robust consumer
protections necessary for the digital asset ecosystem to thrive in the United
States,” House Financial Services Committee Chairman Patrick McHenry said
in a statement. “The bill also ensures America leads the financial system of
the future and remains a hub for technological innovation.”
Specifically, the measure would have redefined both the
SEC’s and the Commodity Futures Trading Commission’s (CFTC)
jurisdiction over digital assets offered as part of an investment contract. It
also would have established a process for allowing the
secondary market to trade certain digital commodities and imposed consumer
protection requirements on entities registered with either agency.
“Appropriate guardrails that protect consumers and investors
are necessary to harness the potential benefits and opportunities of
crypto-asset innovation,” Biden said in a statement. “My administration is
eager to work with the 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.”
SEC Chair Gary Gensler expressed opposition to the bill,
asserting it would “create new regulatory gaps and undermine decades of
precedent regarding the oversight of investment contracts, putting investors
and capital markets at immeasurable risk.”
“The crypto industry’s record of failures, frauds, and
bankruptcies is not because we don't have rules or because the rules are
unclear. It’s because many players in the crypto industry don’t play by the
rules,” Gensler said. “We should make the policy choice to protect the
investing public over facilitating business models of noncompliant firms.”