What is the next step after the successful passage of the FIT21 Encryption Market Bill in the House of Representatives, amidst rising support and opposition voices?
This morning, the House of Representatives passed FIT21, the “21st Century Financial Innovation and Technology Act”. If it is approved by the Senate and signed into law, it will further clarify the regulatory responsibilities of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in the digital asset space, and make regulatory principles more clear.
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House of Representatives Passes “21st Century Financial Innovation and Technology Act”
Supportive Voices
Former Speaker of the House, Nancy Pelosi
Chairman of the House Financial Services Committee, Patrick McHenry
Director of Government Relations at the Blockchain Association, Ron Hammond
CEO of Coinbase, Brian Armstrong
Opposing Voices
The White House
SEC Chairman, Gary Gensler
Member of the House Financial Services Committee, Maxine Waters
FIT21 Still Faces Challenges
In the early hours of today, the U.S. House of Representatives passed the “21st Century Financial Innovation and Technology Act” (also known as FIT21 or HR4763), a bill driven by the Republican Party and focused on the crypto market. The bill aims to comprehensively regulate a broader crypto ecosystem.
The U.S. House of Representatives voting on the FIT21 bill
It is reported that the FIT21 bill will grant a significant portion of cryptocurrency jurisdiction to the Commodity Futures Trading Commission (CFTC), which is seen as a relatively lenient regulatory agency compared to the current SEC.
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At the same time, the bill also includes provisions relating to stablecoins and anti-money laundering, allowing digital assets to be traded legally in secondary markets.
Last week, 60 crypto companies or organizations, including Gemini, Kraken, and Coinbase, expressed their support for the bill, stating that the current securities laws are outdated for new digital asset companies.
With the bill successfully passing the House of Representatives, comments in support of and against the FIT21 bill have been made by members of various parties and individuals in the crypto industry.
Nancy Pelosi, who visited Taiwan in 2022, emphasized in a subsequent statement that the FIT21 bill is the first step in establishing a regulatory framework for digital assets, but further improvements are still needed:
Digital currencies have become integrated into the economy and lives of Americans, and will only become more important in the coming years. To ensure the safe development of emerging technologies, the federal government needs stronger and clearer enforcement powers and regulations.
Patrick McHenry, a crypto-friendly member of the House, also stated that he will fully support the bill before retiring in January next year:
It is time for Congress to provide clear rules for the digital asset ecosystem. We should legislate to protect consumers and allow innovative technologies to flourish in the United States.
Ron Hammond told The Block that the bill is a major turning point for the crypto industry:
Congress’ view on cryptocurrencies is changing and it may undermine the regulatory barriers that SEC Chairman Gensler is trying to establish.
He added, “The connection between the crypto community and the upcoming elections is undeniable, and the Biden administration seems to have finally realized this.”
(The Block: Ethereum Spot ETF Becomes a Political Chip, SEC Rushes to Write the Paper the Night Before the Deadline)
Brian Armstrong also expressed optimism, calling it a “historic vote”:
If the bill becomes law, it will prompt legislative and regulatory agencies to start formulating clear rules to regulate cryptocurrencies, thereby preventing a few radicals within the government from suppressing the industry through ambiguity.
On the eve of the vote, the White House issued a statement expressing opposition to the FIT21 bill, stating that it lacks sufficient protection for digital asset investors and consumers:
However, we still look forward to working with Congress to develop a comprehensive and balanced regulatory framework for digital assets.
Gary Gensler expressed concerns that the FIT21 bill would create regulatory gaps, weakening the SEC’s ability to protect investors and promoting abusive behavior:
The FIT21 bill attempts to reclassify crypto assets, removing them from the SEC’s jurisdiction, and weakening the SEC’s ability to protect investors.
(“Cryptocurrency Market Fears Unlimited Disclaimers!” SEC Chairman Gary Gensler Condemns the FIT21 Cryptocurrency Market Bill Before Voting in Congress)
Senior Democratic Party member Maxine Waters criticized the bill, calling it one of the worst bills she has seen:
The resources and manpower of the CFTC are only one-sixth of the SEC’s, and this agency does not have enough power to regulate cryptocurrencies in this bill.
Currently, the FIT21 bill has only passed the House of Representatives and may take several more months to be deliberated in the Senate, controlled by the Democratic Party. It will undergo multiple rounds of amendments and adjustments.
In other words, even if the FIT21 bill successfully passes both houses, some of its content may still change and will require coordination and consensus between the two houses before being sent to the President for signing.
However, the opposition stance of the Biden administration towards the bill has made its future even more uncertain.
Brian Armstrong
CFTC
FIT21
Gary Gensler
Maxine Waters
Nancy Pelosi
Patrick McHenry
SEC
Biden
White House
Further Reading
Cryptocurrency Lawyer Accuses SEC of Abusing Wells Notices, CFTC: Enforcement Actions Will Only Increase
Consensys Sues SEC, Supports Ethereum, Points out “Four Reasons” Why ETH is Not a Security
