White House opposes FIT21, citing concerns over lack of investor protection
Despite initially threatening to veto the bill, it appears that the administration is no longer threatening to veto FIT21, only citing concerns over specific language in the bill that implied a lack of investor protection.
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The White House has published a statement of administrative policy expressing opposition to the passage of the Financial Innovation and Technology for the 21st Century Act (FIT21) in the US House of Representatives.
In the statement, the White House emphasized its eagerness to work with Congress on developing a comprehensive and balanced regulatory framework for digital assets that builds on existing authorities and promotes responsible innovation while reinforcing US leadership in the global financial system.
The administration also cited concerns over a lack of investor protections should the bill make its way through Congress. As such, the administration believes that FIT21, in its current form, lacks sufficient protections for consumers and investors engaging in certain digital asset transactions.
The statement came just hours after Securities and Exchange Commission (SEC) Chair Gary Gensler published his own opposition to the legislation. Gensler argued that the bill would harm the SEC’s efforts to police both traditional capital markets and crypto markets, and would redefine how securities issuers must comply with existing federal law and Supreme Court precedent.
The administration is “eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities,” in order to “reinforce United States leadership in the global financial system,” the statement declares.
For context, this statement comes after the administration initially threatening to veto the bill. Advocates of the bill contend that current US law does not allow crypto companies to operate without the threat of civil litigation, a view Gensler described as an attempt by these companies to avoid meeting disclosure and other compliance requirements for securities issuers.
FIT21 aims to create a new definition specific to digital assets, identifying when they are considered securities or digital commodities and determining whether the SEC or the Commodity Futures Trading Commission (CFTC) should be the primary spot market regulator.
The full House is set to vote on the bill later on Wednesday afternoon. The White House statement concluded by expressing the administration’s desire for continued collaboration with Congress on developing digital asset legislation that includes adequate guardrails for consumers and investors while fostering the necessary conditions for innovation.
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