Topline
The House passed legislation Wednesday evening that would give oversight authority over most forms of cryptocurrency to a more industry-friendly agency—potentially putting President Joe Biden in the difficult position of deciding whether to go against his own SEC chairman and refuse a veto as former President Donald Trump courts the industry in his 2024 presidential campaign.
The White House said Wednesday it “opposes” the legislation, but stopped short of saying President … [+]
Key Facts
The House voted 279-136 to pass the “Financial Innovation and Technology for the 21st Century Act,” with 71 Democrats and 208 Republicans voting in favor of the legislation.
The legislation would put most forms of cryptocurrency, including bitcoin, under the regulatory purview of the Commodity Futures Trading Commission by classifying them as commodities, rather than securities that would fall under the authority of the Securities and Exchange Commission, which has executed a crackdown on the industry under Biden.
Lawmakers who supported the bill touted it as a way to clarify regulatory authority for digital assets, with digital assets subcommittee chair Rep. French Hill, R-Ark., calling it perhaps “the most substantial piece of digital asset legislation in Congress’s history,” he told Forbes previously, noting Trump supports the bill.
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Chief Critic
The SEC’s crypto crackdown, which includes a series of charges against companies and individuals it accuses of violating federal regulations, has become a new attack line for Trump against Biden as the former president courts crypto backers, telling them at a Mar-A-Lago dinner earlier this month they “better vote” for him, Politico reported. SEC Chair Gary Gensler opposed the House legislation, arguing Wednesday it would allow crypto issuers to “self-certify” that they are issuing crypto as a commodity rather than a security, giving the SEC a limited 60-day window to review the classification.
Crucial Quote
“The self-certification process contemplated by the bill risks investor protection not just in the crypto space; it could undermine the broader $100 trillion capital markets by providing a path for those trying to escape robust disclosures, prohibitions preventing the loss and theft of customer funds, enforcement by the SEC, and private rights of action for investors in the federal courts,” Gensler said Wednesday.
Tangent
Trump’s campaign began accepting crypto donations Tuesday, urging his supporters in making the announcement to “build a crypto army.”
What We Don’t Know
Whether the Democratic-controlled Senate will pass the legislation. Eight House Democrats who backed the bill urged their Senate colleagues to support it in a memo Tuesday, CoinDesk reported. In a potential bellwether for the House bill, 11 Senate Democrats, including Majority Leader Chuck Schumer, D-N.Y., voted alongside Republicans earlier this month to undo crypto SEC regulations, splitting with Biden, who said he’ll veto the bill, which also passed the House with bipartisan support.
Key Background
Trump has embraced crypto after criticizing the industry during his time as president, tweeting in 2019 that he’s “not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.” He has since launched a line of NFT “trading cards” featuring his likeness and his $7 billion net worth is comprised of about $3 million in digital assets, according to a March Forbes estimate. The Biden administration, meanwhile, has taken a measured approach to crypto, acknowledging its explosive growth and the need for the U.S. to “maintain technological leadership in this rapidly growing space,” while also warning it “has substantial implications for consumer protection, financial stability, national security, and climate risk,” the White House wrote in a 2022 executive order.