In a decisive move, the US House of Representatives passed a bill on Wednesday to establish a new legal framework for digital currencies, with a vote tally of 279-136. This legislative shift aims to bring regulatory clarity and foster industry growth, according to the bill’s supporters. However, the Securities and Exchange Commission (SEC) has raised alarms, warning that the bill might introduce significant financial risks.

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SEC Chair Gary Gensler voiced strong concerns, stating that this legislation could create regulatory gaps and disrupt decades of established oversight regarding investment contracts, putting investors and capital markets in jeopardy. Gensler emphasized that cryptocurrencies should be regulated like other assets, citing numerous high-profile fraud cases, bankruptcies, and market failures as evidence.

Moreover, Gensler criticized the bill for potentially removing blockchain-recorded investment contracts from being classified as securities, thereby stripping investors of crucial protections. He highlighted that the bill would enable issuers of crypto investment contracts to self-certify their products as digital commodities, limiting the SEC to just 60 days to contest this classification.

Interestingly, this legislative development coincides with the SEC signaling a likely approval of applications for spot ether exchange-traded funds. Despite the SEC’s stern warnings, proponents of the bill remain steadfast, arguing that the new framework will ultimately benefit the burgeoning digital currency sector.