US House passes crypto bill amid SEC warnings

US crypto bill: Despite warnings from the US Securities and Exchange Commission (SEC) about potential financial risks, the US House of Representatives passed a bill on Wednesday aimed at establishing a new legal framework for digital currencies.

The Financial Innovation and Technology for the 21st Century Act, sponsored by Republicans, secured bipartisan approval with a 279-136 vote. It remains uncertain whether the Senate will consider the measure.

Proponents of the bill in Congress argue that it will offer regulatory clarity and support the growth of the cryptocurrency industry.

Possible approval of ether ETF fund

The House's decision coincides with signals from the SEC indicating its likely approval of applications for spot ether exchange-traded funds, providing an unexpected boost to the industry.

However, SEC Chair Gary Gensler cautioned 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."

Despite Gensler's concerns, the bill garnered support from crypto advocates and industry organisations, who have long viewed the SEC under his leadership as a hindrance to broader adoption of digital assets.

SEC chief wants stern regulations

Gensler has consistently argued that cryptocurrencies should be subject to the same regulations as traditional assets, citing high-profile prosecutions, fraud cases, bankruptcies, and failures.

In his statement on Wednesday, Gensler highlighted that under the bill, investment contracts recorded on a blockchain would no longer be considered securities, thus depriving investors of protection under securities laws.

Additionally, he criticised the bill for potentially allowing issuers of crypto investment contracts to self-certify their products as digital commodities exempt from SEC oversight, with the agency having only 60 days to challenge such certifications.

(With Reuters inputs)