Regulation
The FIT21 Act simplifies US crypto rules by defining SEC and CFTC roles.
This month will be historic for the entire cryptocurrency industry. The House of Representatives is ready to vote on the Financial Innovation and Technology for the 21st Century Act, or FIT21.
This bill promises to streamline the regulation of cryptocurrencies across the country.
Defining the future of cryptocurrency regulation
THE I countformally known as HR 4763, it is designed to create a clear regulatory framework for all digital assets in the United States. The bill plans to address the unique structures of digital assets and provide robust consumer protections.
One of its primary purposes is to clarify the regulatory responsibilities of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
This clarification is important as it will determine whether digital assets fall into the category of securities or commodities, which impacts how they are regulated.
Under the proposed legislation, if a blockchain or digital ledger were functional and decentralized, the CFTC would regulate the corresponding digital asset as a commodity.
However, the SEC would classify digital assets as securities if blockchain were functional but not decentralized. The bill defines decentralization as a scenario in which no single person or affiliated entity controls more than 20% of the digital asset or its voting power.
Address industry concerns and oversight
While the bill received bipartisan support, it was not without criticism, including within the cryptocurrency industry. Some stakeholders are concerned about the bill’s high demands for decentralization, fearing that it gives the SEC too much power to retire any token or project that reverts to a “recentralized” status.
Additionally, there are concerns that the bill does not sufficiently clarify the boundaries between the SEC and CFTC authorities over the cryptocurrency industry.
Despite these concerns, supporters of FIT21 argue that it will provide much-needed regulatory clarity for the industry to continue operating in the U.S.
They believe clearer rules will allow crypto companies to earn public trust, create valuable products and hold bad actors accountable.
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