The Financial Innovation and Technology for the 21st Century Act (FIT21), if passed, would establish a regulatory framework for digital assets, covering areas such as consumer protections, the use of crypto in illicit finance.

However, SEC chair Gensler warns that the bill would remove investment contracts that are recorded on a blockchain from the statutory definition of securities.

"Further, by removing this set of investment contracts from the statutory list of securities, the bill implies what courts have repeatedly ruled - but what crypto market participants have attempted to deny - that many crypto assets are being offered and sold as securities under existing law," says Gensler.

The Biden administration has also come out against the bill, saying that, in its current form, it "lacks sufficient protections for consumers and investors who engage in certain digital asset transactions".

Continues the statement: "The Administration looks forward to continued collaboration with Congress on developing legislation for digital assets that includes adequate guardrails for consumers and investors while creating the conditions needed for innovation, and further time will be needed for such collaboration."

In contrast, Republican presidential candidate Donald Trump and major crypto firms including Gemini, Kraken, Coinbase and the Digital Currency Group all back the bill.

Glenser adds: "The crypto industry’s record of failures, frauds, and bankruptcies is not because we don't have rules or because the rules are unclear. It’s because many players in the crypto industry don’t play by the rules. We should make the policy choice to protect the investing public over facilitating business models of noncompliant firms."

Despite the opposition, the bill - set for a floor discussion and vote on Wednesday - is expected to garner bipartisan support, with several Democrats joining Republicans backing it. However, with no companion bill in the Senate, FIT21 could still peter out.