Regulation
The FIT21 Act simplifies US crypto rules by defining the roles of the SEC and CFTC.
This month will be historic for the entire crypto industry. The House of Representatives prepares to vote on the Financial Innovation and Technology for the 21st Century Act, or FIT21.
This bill promises to simplify the regulation of cryptocurrencies across the country.
Defining the Future of Crypto Regulation
THE Invoiceformerly known as HR 4763, is designed to create a clear regulatory framework for all digital assets in the United States. The bill plans to address the unique structures of digital assets and provide strong consumer protections.
One of its main goals is to clarify the regulatory responsibilities of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
This clarification is important because it will determine whether digital assets fall into the category of securities or commodities, which will impact how they are regulated.
Under the proposed legislation, if a blockchain or digital ledger is functional and decentralized, the CFTC would regulate the corresponding digital asset as a commodity.
However, the SEC would classify digital assets as security if the blockchain is functional but not decentralized. The bill defines decentralization as a scenario in which no person or affiliated entity controls more than 20% of the digital asset or its voting power.
Addressing Industry Concerns and Oversight
Although the bill received bipartisan support, it was not without its critics, even within the crypto industry. Some stakeholders are concerned about the bill’s high decentralization requirements, fearing that it could give the SEC excessive power to remove any token or project that reverts to “recentralized” status.
Additionally, concerns exist that the bill does not sufficiently clarify the boundaries between SEC and CFTC authorities when it comes to the crypto sector.
Despite these concerns, supporters of FIT21 say it will provide the regulatory clarity needed for the industry to continue operating in the United States.
They believe clearer rules will allow crypto companies to gain public trust, create valuable products, and hold bad actors accountable.
Also read how the laws and regulations affect blockchain technology and cryptocurrencies, like Bitcoin, may impact its adoption