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House passes crypto bill despite warnings from SEC

REUTERS/DADO RUVIC/FILE PHOTO
                                Representations of cryptocurrencies Bitcoin, Ethereum, DogeCoin, Ripple, Litecoin are placed on PC motherboard in this illustration taken, in June 2021. The U.S. House of Representatives on Wednesday passed a bill that aims to create a new legal framework for digital currencies, despite an unusual warning from the U.S. securities regulator it could create new financial risks.
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REUTERS/DADO RUVIC/FILE PHOTO

Representations of cryptocurrencies Bitcoin, Ethereum, DogeCoin, Ripple, Litecoin are placed on PC motherboard in this illustration taken, in June 2021. The U.S. House of Representatives on Wednesday passed a bill that aims to create a new legal framework for digital currencies, despite an unusual warning from the U.S. securities regulator it could create new financial risks.

The U.S. House of Representatives on Wednesday passed a bill that aims to create a new legal framework for digital currencies, despite an unusual warning from the U.S. securities regulator it could create new financial risks.

The Republican-sponsored Financial Innovation and Technology for the 21st Century Act passed in a bipartisan 279-136 vote. It is not clear if the Senate will take up the measure.

The bill’s supporters in the U.S. Congress argue that the bill will provide regulatory clarity and help promote the industry’s growth.

The House approval comes as the U.S. Securities and Exchange Commission (SEC) signals that it will likely approve applications for spot ether exchange-trade funds in a surprising boost to the industry.

But SEC Chair Gary Gensler said in a statement that the bill “would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk.”

The bill was backed by crypto supporters and industry organizations who have long viewed Gensler’s SEC as an impediment to the wider adoption of digital assets.

Noting high-profile prosecutions, fraud cases, bankruptcies and failures, Gensler has maintained that cryptocurrencies should be subject to the same laws as other assets.

In Wednesday’s statement, he said under the bill investment contracts recorded on a blockchain would no longer be deemed securities, denying investors protection under securities laws.

Among other criticisms, Gensler said the bill would also allow issuers of crypto investment contracts to certify themselves that their own products are digital commodities not subject to SEC oversight, leaving the agency just 60 days to challenge this.

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