Regulation
The US House will vote on the FIT21 Act, aiming to clarify US regulations on cryptocurrencies
The U.S. House of Representatives will vote on the Financial Innovation and Technology for the 21st Century Act (HR 4763), commonly known as FIT21, later this month.
According to a letter from a16z, this bill seeks to clarify cryptocurrency regulations by defining the responsibilities of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), thus creating a clear regulatory framework for digital assets.
Despite some industry concerns regarding stringent decentralization requirements and potential jurisdictional overlaps, the I count it is seen as a fundamental step towards regulatory clarity.
This bipartisan legislation received support from both the House Financial Services Committee and the Agriculture Committee.
FIT21 aims to specify which digital assets fall under SEC regulation as securities and which fall under CFTC regulation as commodities. The bill aims to classify an asset as a security if its underlying blockchain has not achieved sufficient decentralization.
Additionally, the bill proposes consumer protection measures for cryptocurrency exchanges, such as segregation of customer funds, lock-up periods for token insiders, and disclosure requirements.
Amid continued regulatory uncertainty in the United States, the SEC has assumed the position of the primary regulator of the cryptocurrency industry, pursuing multiple enforcement actions against cryptocurrency-related companies. Some of these actions were demonstrated in his lawsuits against the Coinbase and Binance exchanges.
Following the Coinbase lawsuit, the exchange disputed that the SEC’s classification of cryptocurrencies listed on its platform as securities constitutes an overreach, as the company makes its last-ditch effort to dismiss the lawsuit.
Even the CEO of Binance declared that its lawsuit against the SEC led banking institutions to withdraw support for the exchange. He said this led to significant operational disruptions.
Ripple has also continued to fight the SEC, with its lawsuits now being appealed. The broader crypto community has complained about these enforcement actions, advocating for clearer rules. The House Financial Services Committee on May 10 announced its plan to review the FIT21 law.
House Financial Services Committee Chairman Patrick McHenry highlighted the importance of the FIT21 Act in resolving persistent regulatory ambiguities.
“For too long, the U.S. digital asset ecosystem has been plagued by regulatory uncertainty that has stifled innovation and left consumers unprotected.”
US Representative Patrick McHenry said so.
Previously, crypto.news reported that CFTC Chairman Rostin Behnam had urged Congress to provide a clearer basis for cryptocurrency regulation, highlighting the need to close regulatory gaps.