Regulation
Crypto Regulation Bill Passed in House Heads to Senate
The United States House of Representatives passed a crypto market structure bill on Wednesday evening that aims to regulate the industry as a whole.
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The bill, “Financial Innovation and Technology for the 21st Century Act” (FIT21), would effectively classify cryptocurrency as a commodity, not a security, and would therefore be exempt from securities regulations movable. It would also determine the oversight of cryptocurrencies, whether they should be regulated by the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
The Republican-led bill — the first standalone legislation of this magnitude — passed the lower house 279-136, gaining support from 71 Democrats, including former House Speaker Nancy Pelosi of California.
The crypto bill was approved by the US House of Representatives despite criticism from the SEC chairman. Gary Gensler, who has publicly expressed his opposition to that.
Gensler declared“FIT21 would create new regulatory gaps and undermine decades of precedent for oversight of investment contracts, thereby exposing investors and capital markets to immeasurable risks.” He reiterated his stance on cryptocurrencies as as securities, expressing concern that the bill would exclude investment contracts recorded in the blockchain from the legal definition of securities and, therefore, from the protections of the federal securities laws.
Yesterday, hours before the vote, the White House also expressed opposition to the bill, citing concerns over insufficient investor protections. President Biden issued a statement saying he is against the legislation, but he has not threatened to veto it.
And after?
The bill must now gain Senate approval, but that will be a challenge because key figures in the Democratic-controlled Senate have shown little interest in it.
The bill is very unlikely to become law in Congress, but it may shed light on how Democrats and Republicans view crypto regulation.
In an election year where crypto has become a political issue – with the presumptive Republican presidential nominee Donald Trump accepts crypto donations and Democrats showing a softer stance on crypto – reactions from both political parties matter.