The United States House of Representatives approves the FIT21 bill aimed at clarifying cryptocurrency regulations: Biden and the SEC oppose it.
On May 22, the Financial Innovation and Technology for the 21st Century Act (FIT21), also known as H.R. 4763, was approved by the United States House of Representatives. The bill received support from 71 Democrats and 208 Republicans, while 136 members opposed it. The primary aim of the bill is to clarify the roles of the SEC and the CFTC in regulating cryptocurrencies.
Passage to the Senate and Presidency
Now the bill will move to the Senate, composed of 100 members, which will consider the FIT21. If reviewed, the bill may be assigned to a committee for revisions, hearings, and amendments. Subsequently, a majority of votes — 51 senators — will be necessary to pass it. If approved in both chambers, the bill will reach President Biden’s desk, who will have ten days to decide whether to sign or veto the FIT21.
Despite the Biden administration’s opposition to the bill, no intention to veto has been announced. The White House added that it is “eager to work with Congress” on an alternative bill to establish a regulatory framework for digital assets.
Key points of the law
The FIT21 would transfer much of the control over digital assets to the Commodity Futures Trading Commission, which industry supporters view as a more lenient regulator compared to the SEC. However, the SEC would retain oversight of cryptocurrencies deemed not sufficiently decentralized.
This structure aims to clarify which agencies have authority over specific areas of the cryptocurrency market, outlining a binary regulatory framework between the SEC and the CFTC.
Reactions
The SEC Chairman, Gary Gensler, has publicly criticized the FIT21, arguing that it creates new “regulatory gaps” and jeopardizes market stability and investor security. Through an SEC statement, Gensler stated:
“The crypto industry’s record of failures, frauds, and bankruptcies is not because we don’t have rules or because the rules are unclear. It’s because many players in the crypto industry don’t play by the rules. We should make the policy choice to protect the investing public over facilitating business models of noncompliant firms.”
Coinbase CEO Brian Armstrong has described the passage of the bill as a step towards clearer regulation on digital assets, stating:
“Americans want to know their representatives are protecting their rights to use crypto, creating clear rules to protect consumers, and won’t let the lack of clarity be weaponized by a few activists in the administration trying to unlawfully kill an industry.”
