American lawmakers are trying to sort out regulations on cryptocurrencies “fight for food”

The bill would strengthen the CFTC’s regulatory authority and weaken the SEC’s oversight of digital assets. It is opposed by the SEC and faces a surge in the Democrat-controlled Senate.

Defenders of digital currencies have argued that regulators are stuck in the past and have rules inappropriate to oversee the explosion in cryptocurrency popularity.

House Republicans say FIT21 will strengthen oversight of the rapidly growing digital asset space, increasing transparency and accountability of cryptocurrency exchanges, brokers and dealers.

“The SEC and CFTC are currently fighting for control of this asset class,” Republican Patrick McHenry, chairman of the House Financial Services Committee, said in a statement.

“They have created an impossible situation in which the same companies are subject to competing and conflicting enforcement actions by two different agencies.”

SEC Chairman Gary Gensler warned that the proposed law “would create new regulatory loopholes and undermine decades of precedent in the supervision of investment contracts, exposing investors and capital markets to immeasurable risk.”

In a statement, he said that investment contracts recorded on the blockchain would no longer be considered securities under the regulations, which would remove them from SEC supervision and deny investor protection.

Crypto companies would be able to self-certify investments and products as falling under a special class of “digital goods” under the regulations, Gensler said, arguing that it would allow them to avoid SEC scrutiny.

“The crypto industry’s history of failures, frauds and bankruptcies is not due to a lack of rules or their ambiguity,” he added.

“This is because many players in the crypto industry are not following the rules. We should make policy choices to protect investors from facilitating the business models of non-compliant companies.”

A group of 30 consumer rights groups wrote to congressional leaders opposing the bill on the grounds that it undermines the long-standing legal framework used to determine whether a deal must meet stringent investor protections.

“The bulk of this bill seeks to circumvent these standards, in part by creating an expedited, rubber stamp process for designating crypto assets as ‘commodities,’ thereby narrowing the application of securities regulations to these assets and related entities,” they wrote in a letter dated Monday.

However, 60 crypto organizations have signed a letter supporting the bill, which is also backed by former US President Donald Trump, who is running for re-election and recently said he would start accepting campaign contributions in cryptocurrencies.

“Regardless of what some critics claim, this bill does not create a ‘soft’ regime for cryptocurrency fraudsters or prevent the SEC from policing its markets,” said Rep. French Hill, who chairs the subcommittee on digital assets.

The Biden administration said it “wants to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets,” but added it opposes the bill because it lacks “sufficient consumer and investor protections.”