The U.S. House Passes Landmark Crypto Legislation
In a landmark move, the U.S. House of Representatives has passed the Financial Innovation and Technology for the 21st Century Act, or FIT21, with a strong two-thirds majority. This bill aims to provide much-needed legal clarity on the classification, registration, and custody of crypto assets, marking a significant step forward in the regulation of the crypto industry. The vote, which took place on May 22, 2024, saw near-unanimous support from Republicans, along with an additional 71 votes from Democrats, resulting in a final tally of 279 yes to 136 no.
A ‘Historic’ Step for Crypto Regulation
Industry leaders have widely praised the legislation as a crucial first step towards establishing clear and appropriate rules for digital asset trading and registration. Coinbase CEO Brian Armstrong highlighted the importance of this legislation in a tweet prior to the vote, stating that Americans want their representatives to protect their rights to use crypto and create clear rules to safeguard consumers.
One of the bill’s authors, French Hill (R-AR), explained that the legislation includes an interim oversight process for digital asset firms. This process allows these firms to file a ‘notice of intent to register’ with federal regulators while the rules regarding agency jurisdiction over the industry are finalized. Hill also emphasized the strict consumer protections imposed by the bill, specifically addressing the issue of commingling customer funds to prevent another FTX-like collapse.
Additionally, the FIT21 bill helps clarify the regulatory jurisdiction of crypto assets, delineating between the Securities and Exchange Commission (SEC) and the Commodities and Futures Trading Commission (CFTC). This clarification ends years of bickering between the two agencies over their respective roles in overseeing the crypto industry.
Democratic Opposition and Support
Despite the bill’s broad support, Democrats on the House Financial Services Committee expressed their opposition. They argued that FIT21 would benefit wealthy crypto firms that have avoided registration with the SEC while harming ordinary investors. SEC Chairman Gary Gensler echoed these sentiments, claiming that existing laws are sufficient to regulate crypto and that the industry’s non-compliance is the primary issue.
However, a significant number of Democrats broke ranks with their party, urging their colleagues to support the bill to keep the nation competitive in the global race for crypto regulation and progress. Representative Yadira Caraveo (D-CO) acknowledged the bill’s imperfections but viewed it as a positive step forward.
The Biden Administration’s Shifting Stance
Prior to the vote, the Biden administration expressed opposition to FIT21, stating its willingness to work with Congress on a comprehensive regulatory framework for digital assets. Notably, the administration did not threaten a veto, indicating a shift in its approach to digital asset regulation. This shift may be influenced by former President Donald Trump’s support for the industry, as evidenced by the Trump campaign’s acceptance of cryptocurrency donations during his presidential run.
As the political landscape continues to evolve, the passage of the FIT21 bill represents a significant milestone in the journey towards clear and effective crypto regulation. With bipartisan support, the legislation paves the way for a more stable and secure future for the crypto industry and its investors.
The upcoming elections will undoubtedly play a pivotal role in shaping the trajectory of blockchain technology and its impact on the financial sector, with the FIT21 bill serving as a cornerstone of this evolving regulatory landscape.
