U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has expressed strong opposition to the Financial Innovation and Technology for the 21st Century Act (FIT21), which is about to be voted on in the House of Representatives.

Gensler worries about regulatory loopholes

Gensler’s main criticism focused on the regulatory loopholes that the FIT21 bill could create. He believes that the bill, H.R. 4763, could weaken long-term principles for investment covenants, thereby exposing investors and capital markets to significant risks. Gensler said: "FIT21 will create new regulatory loopholes, undermine decades of precedent on the regulation of investment contracts, and put investors and capital markets at untold risks."

Threats caused by crypto assets

A major concern for Gensler is that the FIT21 bill seeks to reclassify crypto assets, removing them from the SEC’s jurisdiction. Such reclassification could hinder the SEC's ability to protect investors. Gensler worries that crypto companies may self-certify their products as “decentralized” digital commodities to avoid the SEC’s strict scrutiny.

Is self-certification "decentralized" invincible?

Gensler warned that the self-certification process proposed by the bill could lead to substantial market vulnerabilities. He stressed: “Self-certification not only puts investor protections at risk, it could undermine the entire $100 trillion capital market by allowing those who seek to evade full disclosure, protection against loss and theft of customer funds, SEC enforcement, and private investor litigation in federal courts. Provides a way.”

Abusing FIT21 to Evade Securities Laws

Gensler also expressed concern about possible abuse by bad actors taking advantage of these regulatory loopholes.

He proposed a hypothetical scenario in which promoters using "pump and dump" schemes and promoting high-risk stocks could evade securities laws by presenting themselves as crypto investment contracts or self-certifying as decentralized systems. .

Exempting crypto trading platforms from liability raises concerns

Another key point raised by Gensler is that the bill excludes crypto trading platforms from the definition of an exchange. This exclusion, coupled with the elimination of the historically validated Howey test, would severely limit investor protection.

Republicans push crypto market structure bill

The FIT21 bill, promoted by the US Republican Party, aims to comprehensively regulate the broader crypto ecosystem and give the Commodity Futures Trading Commission more responsibilities. Last week, 60 crypto organizations, including Gemini, Kraken, Coinbase and the Digital Currency Group, supported the bill, arguing that current securities laws are outdated for modern digital asset companies.

Elections are most important?

The bill has received support from important political figures, including Republican candidate and former US President Trump, who has expressed his willingness to accept campaign donations in cryptocurrency. House Speaker Nancy Pelosi is also considering voting on the bill. The U.S. House of Representatives is expected to vote on FIT21 later Wednesday.

Gensler: The currency circle has always been in bad shape

In his concluding remarks, Gensler highlighted the crypto industry’s poor track record of regulatory compliance. “The crypto industry’s record of failure, fraud and bankruptcies is not because we have no rules or the rules are unclear, but because many crypto industry participants do not follow the rules,” he said.

This article "The currency circle may be endlessly shirking responsibility!" SEC Chairman Gary Gensler condemned the crypto market bill FIT21 before the parliamentary vote first appeared on Chain News ABMedia.