Regulation
US CBDC and FIT21 Crypto Bills: “Payroll” or Balanced Regulation?
- The U.S. House passed the FIT21 Act to establish regulatory clarity for cryptocurrencies.
- Next up is the US CBDC bill and how the US Senate handles both.
US regulation of cryptocurrencies has seen significant progress as digital assets have become a political and controversial issue ahead of the US elections.
Following the successful repeal of SEC Staff Accounting Bulletin 121 (SAT 121) on May 16, further progress was made on cryptocurrency regulation this week.
On May 22, the United States House of Representatives voted and passed the Financial Innovation and Technology for the 21st Century Act, known as FIT law21. Despite President Joe Biden’s opposition to the FIT21 cryptocurrency bill, it passed with bipartisan support.
FIT21 Crypto Bill
The FIT21 bill aims to establish a regulatory framework for digital assets in the United States. Notably, the bill seeks to offer the majority of cryptocurrency oversight to the CTFC (Commodity Futures Trading Commission), an entity considered less hostile to the industry than the SEC.
However, the SEC will retain authority over digital assets that fall under the definition of “security.” Coinbase founder Brian Armstrong called the FIT21 Act update a “historic vote‘ for the regulation and clarity of cryptocurrencies if passed into law.
“Historic vote today in the House of Representatives on the FIT21 bill, which will finally begin to create clear rules to regulate cryptocurrencies”
The Blockchain Association, for its part, called the development a “watershed moment‘ for the cryptocurrency industry.
Interestingly, the update also sparked reaction from the White House. The administration has expressed its opposition to the FIT21 law, but has maintained its willingness to work towards a “balanced” regulatory framework for digital assets.
Reacting to the White House statement, Bloomberg ETF analyst James Seyffart called it a “lip service.’
“What are the chances that it’s just words? I guess time will tell.”
The next step for the Republican-sponsored FIT21 bill will be the Senate. However, market watchers believe that progress may stall until the next Congress resumes it in January 2025.
After the FIT21 bill, the House will vote on the US CBDC
The US House of Representatives will now vote on another cryptocurrency bill, the CBDC Anti-Surveillance State Act. HR5043, this week. The bill aims to prevent the Federal Reserve from issuing CBDC (Central Bank Digital Currency), also known as the digital dollar, or using it as a monetary policy tool.
The bill was introduced by Tom Emmer, the head of the Republican majority in the House, who maintained that the US CBDC promoted by the Fed would threaten the privacy of Americans.
“The Biden administration has demonstrated that it is eager to trade Americans’ right to privacy for a CCP-style CBDC surveillance tool.”
If both bills pass the U.S. House and Senate and become law, they could provide the regulatory clarity the industry has long sought.