Regulation
The cryptocurrency regulation bill has passed the House and moves to the Senate
The US House of Representatives passed a cryptocurrency market structure bill on Wednesday evening that aims to regulate the industry overall.
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The bill, “The Financial Innovation and Technology for the 21st Century Act” (FIT21), would effectively classify cryptocurrency as a commodity, not a security, and therefore exempt from securities regulations. It would also determine the oversight of cryptocurrencies, whether they should be regulated by the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
The Republican-led bill – the first stand-alone legislation of this magnitude – passed by a vote of 279-136 in the lower house, winning the support of 71 Democrats, including former House Speaker Nancy Pelosi, Rep. of California.
Cryptocurrency bill cleared in U.S. House despite criticism from SEC chairman Gary Gensler, who has publicly expressed his opposition Now.
Gensler declared, “FIT21 would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, exposing investors and capital markets to immeasurable risk.” He reiterated his position on cryptocurrency as a security, expressing concern that the bill would exclude investment contracts recorded on blockchain from the legal definition of securities and, therefore, from the protections of the federal securities laws.
Yesterday, a few hours before the vote, the White House also expressed opposition to the bill, citing concerns due to inadequate investor protection. President Biden released a declaration saying he opposes the legislation, but has not threatened to veto it.
What’s next?
The bill must now win Senate approval, but that will be challenging as leading figures in the Democratic-controlled Senate have shown little interest in it.
There is a very low chance that the bill will become law in Congress, but it may shed light on how Democrats and Republicans view cryptocurrency regulation.
In an election year where cryptocurrencies have become a political issue, with the presumptive Republican presidential candidate Donald Trump accepting cryptocurrency donations and Democrats show a softer stance towards cryptocurrencies: the reactions of both political parties are important.