Regulation
FIT21 Bill Seen as Solution to U.S. Crypto Exodus Problems
Last updated: May 24, 2024 04:02 EDT | 3 minutes of reading
THE Approval of the Financial Innovation and Technology for the 21st Century Act (FIT21) Wednesday would bring the United States in line with other countries in terms of a regulatory framework for crypto, according to Kyle Bligen, director of financial policy at the House of Progress.
Bligen told Cryptonews in an interview on Thursday that if the FIT21 invoice Passed by the Senate and becoming law, this would prevent crypto companies from leaving the United States for countries with clearer regulations.
The legislation would provide increased freedoms for cryptocurrency operators in the United States. Additionally, it would shift more regulatory responsibilities for digital assets to the Commodity Futures Trading Commission (CFTC).
It would also make it clear which companies are regulated by the SEC and CFTC and create a system for registering those companies. This would allow them to legally serve customers who want to buy and sell digital assets. The SEC would oversee digital assets that are considered securities, while the CFTC would oversee things like commodities and derivatives tied to digital assets.
Outdated law hampers US crypto regulation
Bligen pointed out that the United States uses a nearly century-old law, the Howey test, from the SEC to regulate the cryptocurrency invented just a few years ago. He argued that the current system is outdated and does not work with this technology.
“I hope that [bill] makes the United States a leader in regulation that desires strong consumer protections,” he said. “We already have the most liquid and attractive capital markets in the United States. There is no reason why we can’t also have the best cryptocurrency markets.
FIT21 considered a means of retaining crypto talent
Harry Sudock, chief strategy officer of Bitcoin miner GRIID, agrees that the bill would propel the United States into a competitive position in the international crypto scene. Additionally, he believes that FIT21 would attract the brightest minds in the crypto field to come and stay in the United States.
“We have seen a number of companies leaving the United States or refusing to do business there due to regulatory uncertainty,” he said. “FIT21 will help these businesses return to the United States, but the bill is really just the beginning. »
FIT21 House of Representatives Obstacle Cleared, Senate Showdown Looms
FIT21’s journey to becoming law is not yet complete. Although he managed to clean up the House, he still faces an uphill battle. The bill must be approved by the Senate and then signed by the President before becoming law. It remains to be seen whether the Senate will give the green light.
Ronen Cojocaru, CEO of automated crypto trading platform 8081, highlighted the unique challenges crypto bills face in the Senate. Some senators are tech-savvy and may be strong supporters or opponents of the FIT21 Act. However, others might lack a thorough understanding of the intricacies of cryptocurrency, leaving them undecided about the merits of the bill.
“Public opinion and upcoming elections influence senators’ decisions, aligning them with their party’s agenda and the interests of voters,” he said. “Senators can use the filibuster, requiring 60 votes to advance the bill, which is difficult without strong bipartisan support.”
Cojocaru also explained why the United States is currently lagging behind other countries. He cited Switzerland, nicknamed “Crypto Valley,” as a prime example. Switzerland’s financial regulator, FINMA, promotes innovation by providing clear guidelines for crypto businesses, making it a global hub for the sector.
Singapore has also attracted many crypto companies with its well-defined regulations and supporting policies. Its central bank, the Monetary Authority of Singapore (MAS), has struck a balance between encouraging innovation and protecting consumers. Similarly, Malta, known as “Blockchain Island,” has become a magnet for crypto businesses thanks to its comprehensive and crypto-friendly regulations.
CFTC versus SEC in crypto regulation
Meanwhile, James Koutoulas, founder of Typhon Capital Management, said FIT21 needs work, especially for DeFi. Additionally, he highlighted the unprecedented power it gives the CFTC to regulate crypto as a spot commodity, which falls outside its usual purview of regulating commodity derivatives.
“But, at least at present, the CFTC is infinitely less hostile to crypto than the SEC and appears to be focused on implementing regulatory pathways instead of maliciously attacking market leaders without the legal authority to do so like the SEC,” Koutoulas said.