U.S. Congress undertook its first-ever markup for digital asset legislation on Wednesday, attempting to establish clear jurisdiction for the nation’s chief market regulators.

The bill was not well received by Democrats, however, many of whom find it overly friendly to the crypto industry, and similar to what disgraced FTX boss Sam Bankman-Fried had advocated for.

Democrats Blast Crypto Bill

During the hearing, House Financial Services Committee (HFSC) Chair Patrick McHenry (R-NC) said that the bill – titled the Financial Innovation and Technology for the 21st Century Act –will clarify how the Supreme Court’s Howey Test applies to digital assets, focusing on “decentralization” and “functionality.”

Specifically, the act describes how digital assets may be offered as part of a securities contract without necessarily being securities themselves. The decision to rework decades-old investor protection laws to accommodate crypto was criticized by Rep Maxine Waters (D-CA), who called the bill a “wish list” for the industry.

“We don’t need to invent new regulatory structures simply because crypto companies refuse to follow the rules of the road,” said Waters, adding that the bill disregards views from both the Biden Administration and Securities and Exchange Commission (SEC).

Waters also claimed that the bill would create “loopholes” for traditional financial institutions to bypass existing requirements.

Rep Brad Sherman (D-CA) expanded on this point, claiming that public companies could abuse the bill by re-issuing their securities as blockchain tokens, allowing them to be regulated by the Commodities and Futures Trading Commission (CFTC) instead of the SEC.

“The scent of Sam Bankman-Fried still wafts in the air,” said Sherman, suggesting that the blll’s purpose is to avoid SEC regulation altogether. “That’s the effective regulation that Sam Bankman-Fried was here to prevent.”

Better Than Nothing

Sherman also crit