According to Odaily, SEC Chairman Gary Gensler voiced his concerns on Wednesday about the potential harm the 'Financial Innovation and Technology Act of the 21st Century' (FIT 21) could cause to investor interests and the functioning of the SEC. Gensler warned that FIT 21 could create regulatory gaps, disrupt decades-long precedents on investment contract supervision, and expose investors and capital markets to incalculable risks.
The FIT 21 bill, jointly proposed by the House Agriculture Committee and the House Financial Services Committee, aims to clarify how the SEC and the Commodity Futures Trading Commission (CFTC) regulate cryptocurrencies. The bill introduces the term 'digital commodities' for digital assets that do not meet the definition of securities, placing these assets under the supervision of the CFTC.
Gensler expressed concern that FIT 21 could allow cryptocurrency companies to self-certify their cryptocurrency investments and products as 'decentralized' and belonging to a 'special category' of 'digital goods', thereby avoiding SEC scrutiny. He pointed out that the agency's ability to challenge these self-certifications would be limited by resource constraints, potentially leading to a majority of the cryptocurrency market being unregulated.
Furthermore, Gensler stated that the bill would exclude cryptocurrency trading platforms from the definition of exchanges and abolish historically tested frameworks such as the Howey Test, which could ultimately expose investors to risk. The House is expected to vote on the bill later on Wednesday.
