Regulation
Democrats oppose the FIT21 cryptocurrency regulation bill ahead of the House vote
As well as the SEC’s decision on the matter Spot ETF on EthereumThis week’s spotlight will be on the House floor vote on H.R. 4763, the Financial Innovation and Technology for the 21st Century Act (FIT21), a bill expected to be the most intensive effort yet US regulators establish a legal framework for digital assets.
However, an email shared with Politico shows that House Democratic leaders “strongly opposed” the bill.
The email was reportedly sent by House Financial Services Committee Ranking Member Maxine Waters (D-Calif.) and House Agriculture Committee Ranking Member David Scott (D- Ga.). Despite their opposition, the two Democratic leaders chose not to exploit the vote.
Democrats hate cryptocurrencies
Explaining the reasons behind the opposition, Waters and Scott noted in the email that the bill would undermine “decades of legal precedent and case law,” create “uncertainty” in the “traditional securities market,” and weaken “investor protections ”.
One major concern is the bill’s creation of a “safe harbor” for certain digital assets, which could leave them unregulated until the SEC and CFTC finalize new rules. Democrats argue this opens the door to fraud and manipulation.
Additionally, in a “Dear Colleague” letter posted on the House Financial Services Committee Democrats’ page, they also said the bill was “not fit for purpose.”
The two lawmakers also believe that passing the bill would prevent shareholders from suing public companies, override state regulations related to digital assets, undermine fiduciary requirements, and negatively affect capital markets.
A decent bill
The FIT21 legislation aims to introduce several changes to the US regulatory approach towards digital assets. One of the highlights of the bill is to subject the digital asset sector to regulation by the Commodity Futures Trading Commission (CFTC).
Currently, both the Securities and Exchange Commission (SEC) and the CFTC can impact the industry, but the two agencies struggle to reach a consensus. An example of flash is the Ethereum (ETH) classification. While the CFTC leans towards commodity status, the SEC would attempt to classify ETH as a security.
FIT21 is considered the United States’ largest effort to provide clear guidance to the new industry, especially since the country appears to be lagging behind other jurisdictions when it comes to regulating digital assets.
Backed by numerous crypto entities, including Coinbase, Kraken and Andreessen Horowitz, the bill seeks to establish measures to protect customers from risks associated with digital assets and a framework for holding such assets and their management in bankruptcy proceedings.
There are better locations for cryptocurrency business
Industry experts believe that the FIT21 legislation, if it becomes law, will play an important role in the future of the cryptocurrency industry in the United States. The current lack of clear guidance has created a lot of confusion for businesses operating in the country, even prompting many to move to other jurisdictions where the legislative landscape is more welcoming.
The email from the Democratic Whip’s office also urges members to vote against HR 192, a separate bill that limits the Federal Reserve’s ability to issue a central bank digital currency (CBDC). Democrats argue that the bill could “undermine the Fed’s ability to conduct monetary policy.”
The “battle” between the two parties leading the United States has become more intense. Recently, the House passed HJRes. 109, a bill that seeks to overturn SEC Staff Accounting Bulletin No. 121 (SAB 121). Last Thursday, the US Senate voted in favor of the bill, bringing it to the President’s desk.
President Joe Biden is expected to decide whether to sign the bill or veto it. According to a statement released by the White House ahead of the House vote, the Biden administration may choose to veto the bill because it believes it could undermine the SEC’s ability to regulate digital assets.
However, with the upcoming presidential election, Biden may consider this option as it could lead to loss of votes, given that his biggest rival Donald Trump has publicly supported the cryptocurrency industry.