Regulation
House of Representatives Passes Broad Crypto Bill FIT21 – DL News
- The crypto regulation bill passed in a bipartisan vote in the United States House of Representatives.
- The FIT21 bill promises to give commodity regulators greater oversight over digital assets.
- The bill may not make it to the next stage in the Senate.
- President Joe Biden does not support the bill but has said he would not veto it.
The US House of Representatives has voted to pass a landmark crypto bill as digital assets become a political football just months before the presidential election.
The Republican Financial Innovation and Technology for the 21st Century Act, known as the FIT21 Act, passed with a bipartisan vote of 279 in favor and 136 against. Notably, 71 Democrats supported the bill, including former House Speaker Nancy Pelosi. Another 133 voted against.
Among Republicans, only three voted against. Another 208 people supported the bill.
FIT21 promises to establish clear rules for digital assets long sought by the crypto industry.
Hours before the vote, the Biden administration declared itself against the bill, but did not threaten to veto it — a relief for the industry.
The bill would end the crypto “food fight for control” between the Securities and Exchange Commission and the Commodity Futures Trading Commission, said Republican Rep. Patrick McHenry of North Carolina, co-sponsor of the bill. law and chairman of the House Financial. Services Committee.
“This is the most important moment in crypto policy and legislation in U.S. history thus far,” said Rashan Colbert, head of policy at the open source software developer and platform. decentralized trading dYdX Trading. DL News.
Upcoming Senate Challenge
The FIT21 bill will then have to be adopted by the Senate. The looming election means priorities could change.
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“There’s a good chance that progress will stop after this vote, but that doesn’t mean it’s a pointless exercise,” said Colbert, a former member of the U.S. Senate.
This progress is symbolically important, Colbert said, and shows political will to regulate the digital asset market. It also creates a reference point for bipartisan agreement on how to regulate crypto.
And even if the bill doesn’t pass in its current form, its provisions could end up in other laws.
What’s in the bill
The bill is tailored to digital assets and provides an unprecedented framework for the industry. It was removed from the House Financial Services and Agriculture committees with bipartisan support in July.
FIT21 establishes definitions for crypto assets and divides responsibilities between the Commodity Futures Trading Commission and the Securities and Exchange Commission.
The rules would give the CFTC, seen as more industry-friendly, more jurisdiction over the sector. The definitions determine whether an asset would be subject to SEC or CFTC oversight.
Decentralized finance does not fall within the scope of the bill.
The rules would provide “an increased level of comfort knowing that we have the explicit authority to continue doing what we’re doing, which is really all they want at the moment,” Colbert said.
The vote follows another political victory for crypto. Last week, the U.S. House and Senate voted to repeal the SEC’s controversial accounting guidelines, called SAB121.
At the same time, the industry expects regulators to approve Ethereum spot exchange-traded funds.
More negative reactions
The White House wrote in a brief Wednesday, the bill “in its current form does not have sufficient protections for consumers and investors who engage in certain digital asset transactions.”
But the White House notably said it would work to develop a regulatory framework for digital assets with Congress.
Democratic Rep. Maxine Waters of California called FIT21 “a wish list of big cryptocurrencies and does not deserve any of our support.”
The bill’s impact isn’t limited to crypto, Waters said Wednesday.
FIT21 would move crypto as well as some traditional securities from SEC oversight to a “regulatory no man’s land, without a primary regulator,” she said. She called it “the worst and most harmful proposal I’ve seen in a long time” and predicted a recession if it passed.
So does Massachusetts Democrat Stephen Lynch, who called it “a radical rewrite of this country’s securities laws.”
As crypto markets and traditional financial markets begin to merge, he predicted that volatility in the crypto market would lead to disaster in the traditional financial market.
“This will ultimately wreak havoc on our financial markets,” Lynch said.
While Wednesday’s comments also fell along party lines — with Republicans supporting the bill and Democrats urging their colleagues to vote “No” — several Democrats expressed support.
Rep. Wiley Nickel, a North Carolina Democrat, said the U.S. was “relying on a 90-year-old securities law that was written before the Internet was even invented.”
“We can’t wait for the next FTX to act,” he added.
SEC Chairman Gary Gensler, seen as an enemy of the industry, said the bill poses a risk to markets and investors.
FIT 21 “would undermine decades of precedent for oversight of investment contracts, exposing investors and capital markets to immeasurable risks,” Gensler said in a statement. statement Wednesday.
The SEC has charged key players in the industry, including ConsenSys, Coinbase, KrakenAnd Robinhood Marketplace crypto companies, with securities violations.
Industry experts say the SEC’s requirements are not enforceable or designed for issuers of digital assets.
“For too long, the U.S. digital asset ecosystem has been plagued by regulatory uncertainty that has stifled innovation and left consumers unprotected,” McHenry said in a statement. statement earlier this month.
Industry Support
“The lack of clear rules leads to market confusion for businesses and leaves users and consumers unprotected,” says the Blockchain Association. wrote in a letter to Senate lawmakers Monday.
“This lack of clarity hinders innovation and cripples businesses, hurting America’s position in the global technology race.”
Last week, dozens of crypto companies – including Coinbase, Andreessen Horowitz and Kraken – sign an industry letter organized by the Crypto Council for Innovation in support of FIT21.
“The United States lags behind other major jurisdictions in developing a regulatory framework for digital assets,” the letter said, adding that American innovators may migrate elsewhere.
“It is crucial that the United States maintains its leadership in financial innovation. »
McHenry echoed that sentiment Wednesday.
“We are lagging behind Europe,” he said. “This bill catches up [us] so that we do not lose out on innovation policy to the Europeans, the British, Singapore, Japan and Hong Kong.
Update, May 22: This story has been updated to include the partisan divide in Congress’s vote for FIT21.
Inbar Preiss is DL News’ regulation correspondent. Contact the author at inbar@dlnews.com. Aleks Gilbert is DL News‘ DeFi correspondent based in New York. You can reach him at aleks@dlnews.com.