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President Joe Biden’s administration has decided to oppose the passage of the Financial Innovation and Technology for the 21st Century Act (FIT21) as it goes up for a vote in the House of Representatives. The White House released a statement expressing concerns that FIT21 lacks sufficient protections for consumers and investors who engage in digital asset transactions. However, the administration is open to working with Congress to develop a comprehensive regulatory framework for digital assets that promotes responsible development and innovation in the financial sector. The White House’s stance on FIT21 comes at a critical time as the House is set to vote on the legislation, which is supported by the blockchain sector and aims to provide greater freedoms to U.S. crypto operators.

SEC Chair Gary Gensler also criticized FIT21, citing concerns that the bill would put investors and capital markets at risk by delegating regulatory responsibility to the Commodity Futures Trading Commission (CFTC). Gensler argued that the failures and frauds within the crypto industry are due to players not following existing rules, rather than a lack of clear regulations. The SEC has faced criticism for its aggressive approach to regulating digital assets, with multiple lawsuits filed against major crypto organizations in recent years. The opposition from both the Biden administration and SEC Chair Gensler highlights the ongoing debate surrounding the regulation of digital assets and the potential impact on market stability.

Despite the pushback from the Biden administration and the SEC, there is growing momentum around crypto-related legislation in Congress. A recent bipartisan resolution aimed at overturning a controversial staff accounting bulletin received support from both chambers, despite Biden indicating he would veto it. Additionally, Republican presidential candidate Donald Trump has shown support for cryptocurrency by accepting donations in crypto for his campaign. This shift in political attitudes towards digital assets signals a potential change in regulatory approach at the federal level, with Paradigm’s lead on government affairs calling it a “huge course correction” by the White House.

The White House’s recognition of the need for comprehensive crypto legislation to promote innovation and reinforce U.S. leadership is seen as a positive step towards establishing clear regulations in the digital asset space. The statement also reflects a willingness to collaborate with Congress to develop a balanced regulatory framework that addresses the concerns raised about FIT21. While there is uncertainty about the future of crypto regulation in the U.S., the recent developments suggest a potential shift towards a common-sense approach that balances innovation with investor protection and market stability. Only time will tell if lawmakers can come to a consensus on how to effectively regulate digital assets in the evolving financial landscape.

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