Regulation
US House Passes New Regulatory Bill in a Victory for Cryptocurrencies
The U.S. House of Representatives voted 279-136 to pass the Financial Innovation and Technology for the 21st Century Act (FIT21).
The vote showed significant support from Democratic members. If enacted, the FIT21 bill could significantly alter the regulatory framework for digital assets in the United States, marking a notable legislative development for the cryptocurrency industry. Among the votes, 208 Republican members supported the bill and 71 Democrats also voted for it.
Only three Republican members opposed the bill, while nearly a third of Democratic members supported it. This bipartisan support indicates a shift in attitudes toward cryptocurrency on Capitol Hill.
Recently, both the House and Senate passed measures that overturned cryptocurrency custody rules for banks established by the U.S. Securities and Exchange Commission (SEC). The FIT21 bill is now set to move to the US Senate, where its future is uncertain due to the absence of a counterpart bill and varying levels of support among senators.
Obstacles ahead
Furthermore, there are concerns that the necessary work of the committee on the regulation of cryptocurrencies has not been adequately addressed. Despite this legislative progress, the United States remains behind in establishing comprehensive cryptocurrency regulations.
The FIT21 bill proposes a comprehensive federal framework for the regulation of digital assets, defining jurisdictional boundaries between the Commodity Futures Trading Commission (CFTC) and the SEC. This framework allows issuers to self-certify assets as commodities.
The bill limits the SEC’s regulatory authority, granting the CFTC exclusive oversight of digital commodities. Criteria for determining the status of an asset include the level of decentralization, ownership of the token supply, and the susceptibility of the blockchain to the influence of a single entity.
Opposition from SEC Chairman Joe Biden and some Democrats
SEC Chairman Gary Gensler expressed opposition to the FIT21 bill, arguing that it would exclude investment contracts from the definition of securities. According to the SEC, many tokens function like securities because investors expect profits based on the efforts of others.
President Joe Biden has also expressed opposition to the bill, indicating that he will veto legislation that removes SEC rules on cryptocurrency custody for banks. Furthermore, Biden highlighted the lack of sufficient investor protections and called for a balanced regulatory framework.
Several Democratic members criticized the bill. Congresswoman Maxine Waters pointed out that the bill provides significant exemptions from crucial securities laws. She noted that crypto companies are avoiding registration and the bill would allow them to operate without adequate regulatory oversight. Representative Brad Sherman expressed concern that changes to the definition of a security could have a negative impact on broader financial markets.