SEC Chair Gary Gensler criticized the Financial Innovation and Technology for the 21st Century Act (FIT21) ahead of a vote in the House, claiming it would create regulatory gaps and undermine investment oversight, putting investors at risk. He argued that the bill would negate the Howey Test and allow crypto operators to self-certify their products, ultimately protecting non-compliant firms over the investing public. Gensler’s comments reflect a broader wave of momentum for crypto regulation on Capitol Hill, including a recent resolution to overturn the SEC’s controversial crypto accounting guidance.
Earlier this month, both chambers of Congress voted on a resolution to disavow the SEC’s crypto accounting guidance, signaling potential pushback from U.S. lawmakers over the regulatory regimen towards digital assets. Pro-crypto Senator Cynthia Lummis claimed the vote was a win for financial innovation and a clear rebuke of the way the Biden administration and Gary Gensler have treated the crypto industry. Gensler has faced criticism from key players in the crypto space for the SEC’s litigation against digital asset organizations.
Ripple’s Chief Legal Officer Stuart Alderoty criticized Gensler’s leadership of the SEC, stating that Gensler overplayed his hand and is now a struggling political liability. Alderoty argued that Gensler thought crypto was an easy target and relished being the subject of criticism, but is now facing backlash and Congressional oversight. If FIT21 is advanced by U.S. lawmakers, it would represent the government’s first successful push for a crypto regulatory framework and a reprimand of Gensler’s treatment of digital assets.
Overall, there is growing pushback against Gary Gensler and the SEC’s approach to regulating the crypto industry, with concerns about FIT21 potentially creating regulatory gaps and undermining investor protection. The recent resolution disavowing the SEC’s crypto accounting guidance highlights a broader trend of lawmakers questioning the SEC’s actions towards digital assets. Ripple’s legal battle with the SEC over the sale of cryptocurrency XRP also underscores the contentious relationship between the regulator and the crypto industry. Moving forward, the outcome of the FIT21 vote will be a significant indicator of how U.S. lawmakers view Gensler’s approach to regulating digital assets and whether a comprehensive regulatory framework will be implemented.
