United States President Joe Biden and Securities and Exchange Commission (SEC) Chair Gary Gensler have released statements before the House of Representatives votes on a critical piece of legislation affecting the regulation of cryptocurrencies.
In a May 22 notice, the Biden administration said it opposed Congress passing H.R. 4763, the Financial Innovation and Technology for the 21st Century (FIT21) Act, claiming it “lacks sufficient protections for consumers and investors who engage in certain digital asset transactions.” The White House’s position was announced shortly after Chair Gensler released a statement claiming FIT21 would “create new regulatory gaps” and risk the stability of U.S. capital markets if passed.
Gensler cited a January Chainalysis report to support his claim that “widespread noncompliance [from crypto firms] has resulted in widespread fraud, bankruptcies, failures, and misconduct.” However, the analytics platform reported that revenue from illicit activities involving crypto was “down big” in 2023.
“The crypto industry’s record of failures, frauds, and bankruptcies is not because we don’t have rules or because the rules are unclear,” said the SEC chair. “It’s because many players in the crypto industry don’t play by the rules. We should make the policy choice to protect the investing public over facilitating business models of noncompliant firms.”
H.R. 4763, set for a vote in the House on May 22, would clarify how the SEC and Commodity Futures Trading Commission handle digital asset regulation. Many industry leaders and lawmakers have suggested that a lack of regulatory clarity in the crypto space has led to some companies leaving the United States or staying and risking SEC enforcement actions.
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The White House added that it was “eager to work with Congress” for an alternative bill to establish a regulatory framework for crypto. The statement suggested that President Biden would not consider a veto of the FIT21 bill if passed, which he said he would do with H.J.Res. 109, a joint resolution countermanding an SEC accounting rule on banks handling crypto.
All House members will likely vote on the FIT21 bill on May 22. Republican lawmakers currently have a slim majority in the chamber, but 21 Democrats also voted in favor of H.J.Res. 109 on May 8. Representatives Wiley Nickel and French Hill — a Democrat and Republican, respectively — have publicly said they intend to vote yay on FIT21.
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