- SEC Chair Gary Gensler slammed the proposed crypto regulation FIT21 ahead of its House vote, citing “immeasurable risk” to investors
- Gensler argued that FIT21 would undermine existing securities laws and allow crypto firms to self-certify products, putting investors at risk
- The crypto industry criticized Gensler’s stance, with Ripple’s chief legal officer calling him a “struggling political liability”
SEC Chair Gary Gensler criticized the Financial Innovation and Technology for the 21st Century Act (FIT21) ahead of the crypto regulations expected vote in the House today in a blog post published on the SEC’s website Wednesday.
Gensler Claims FIT21 Would Create Regulatory Gaps and Undermine Securities Law
In the post, Gensler claimed the bill would “in part create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, ultimately putting investors and capital markets at immeasurable risk.” In particular, he argued that FIT21 would work against already established securities law by negating the long-accepted Howey Test while reneging current regulations on investment contracts, allowing crypto operators to self-certify their products.
Gensler Says Crypto Industry Doesn’t Follow Rules
“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 continued. “We should make the policy choice to protect the investing public over facilitating business models of non-compliant firms.”
Momentum Builds for Crypto Regulation in Congress
Gensler’s commentary comes amidst growing momentum for crypto regulation in Congress, potentially pushing back against the SEC’s stance on digital assets. Earlier this month, Congress voted to overturn the SEC’s controversial crypto accounting guidance known as SAB121. Senator Cynthia Lummis called it “a win for financial innovation and a clear rebuke of the way the Biden admin and Gary Gensler have persecuted crypto.”
Ripple Criticizes Gensler’s Leadership
Meanwhile, Ripple’s Chief Legal Officer Stuart Alderoty, who is locked in a legal battle with the SEC over XRP, took to Twitter early Wednesday to criticize Gensler’s leadership. “Gensler overplayed his hand. He thought crypto was an easy target. He relished being the guy that everyone loved to hate. He thought he was above Congressional oversight. That’s all gone. He’s now a struggling political liability,” Alderoty wrote.
Conclusion
Should Congress advance FIT21, it would mark the first successful push for a crypto regulatory framework in the US and a strong reprimand of Gensler’s stance on digital assets.
