Regulation
Democrats oppose FIT21 crypto regulation bill ahead of House vote
In addition to the SEC’s decision on spot Ethereum ETFsThis week, the focus will be on the House vote on H.R. 4763, the Financial Innovation and Technology for the 21st Century Act (FIT21), a bill expected to be the closest effort of American regulators establish a legal framework for digital assets.
However, an email shared with Politico shows that Democratic leaders in the House of Representatives “strongly opposed” the bill.
The email was reportedly sent by Maxine Waters (D-Calif.), Ranking Member of the House Financial Services Committee, and David Scott (D-G.A.), Ranking Member of the House Agriculture Committee . Despite their opposition, the two Democratic leaders chose not to whip the vote.
Democrats hate crypto
Explaining the reasons for their opposition, Waters and Scott noted in the email that the bill would undermine “decades of legal precedent and case law,” create “uncertainty” in the “traditional securities market » and would weaken “investor protection”.
A major concern is the bill’s creation of a “safe harbor” for certain digital assets, potentially leaving them unregulated until the SEC and CFTC finalize new rules. Democrats say this opens the door to fraud and manipulation.
Additionally, in a “Dear Colleague” letter posted on the House Financial Services Committee Democrats page, they also claimed the bill was “not fit for purpose.”
The two lawmakers also believe that passing the bill would prevent shareholders from suing public companies, preempt state regulations regarding digital assets, undermine fiduciary requirements, and negatively affect capital markets.
A decent bill
The FIT21 legislation aims to introduce numerous changes to the US regulatory approach to digital assets. One of the highlights of the bill is to bring the digital assets sector under the regulation of the Commodity Futures Trading Commission (CFTC).
Currently, the Securities and Exchange Commission (SEC) and CFTC can impact the industry, but both agencies struggle to reach consensus. An example of flash is the classification of Ethereum (ETH). While the CFTC is inclined toward commodity status, the SEC has reportedly attempted to classify ETH as a security.
FIT21 is seen as the United States’ largest effort to provide clear guidance to the new industry, especially as the country appears to be lagging behind other jurisdictions in regulating digital assets.
Supported by numerous crypto entities, including Coinbase, Kraken, Andreessen Horowitz, the bill seeks to establish measures to protect customers from the risks associated with digital assets and a framework for holding these assets as well as their treatment in securities procedures. bankruptcy.
Better locations exist for crypto activities
Industry experts believe that the FIT21 legislation, if it becomes law, will play an important role in the future of the cryptocurrency industry in the United States. The current lack of clear guidance has created a lot of confusion for businesses operating in the country, even pushing many to move to other jurisdictions where the legislative landscape is more welcoming.
The email from the Democratic whip’s office also calls on members to vote against HR 192, a separate bill that restricts the Federal Reserve’s ability to issue a central bank digital currency (CBDC). Democrats say the bill could “undermine the Fed’s ability to conduct monetary policy.”
The “battle” between the two parties for leadership of the United States has become more intense. Recently, the House passed HJRes. 109, a bill that seeks to overturn the SEC’s Staff Accounting Bulletin No. 121 (SAB 121). Last Thursday, the US Senate voted in favor of the bill, bringing it to the President’s desk.
President Joe Biden is expected to decide whether to sign the bill or veto it. According to a statement released by the White House ahead of the House vote, the Biden administration may choose to veto the bill because it believes it could harm the SEC’s ability to regulate digital assets.
However, with the presidential election approaching, Biden may consider this option as it could result in a loss of votes, given that his biggest rival, Donald Trump, has publicly supported the crypto industry.