The U.S. House of Representatives passes the FIT21 bill, the dawn of a new era of cryptocurrency regulation

Supporters of the bill aim to end the U.S. Securities and Exchange Commission’s (SEC) “enforcement-style regulatory” approach to the crypto industry.

Supporters of the bill seek to end the “enforcement-style regulation” strategy that the SEC relies on for the cryptocurrency industry. To achieve this goal, they supported new legislation, the Financial Innovation and Technology for the 21st Century (FIT21) Act, which passed the U.S. House of Representatives during its Monday session. The passage of the FIT21 bill marks a major development in the legal status of crypto-assets. It will provide a clear legal framework for the classification, registration and custody of crypto-assets, which the industry has long sought.

During the voting process in the House of Representatives, the bill received broad support from Republican members and the endorsement of 71 Democratic members. In the end, the FIT21 bill was successfully passed with 279 votes in favor and 136 votes against, reflecting the common will of both parties to provide clear legal guidance for the cryptocurrency industry. With this legislation, the United States has taken an important step in cryptocurrency regulation, aiming to provide investors and industry participants with a more stable and predictable legal environment.

A “historic” step in cryptocurrency regulation

Crypto industry leaders generally hailed the legislation as a first step toward clear rules for the trading and registration of digital assets.

Coinbase CEO Brian Armstrong tweeted on Wednesday ahead of the vote: “Americans want to know their representatives are protecting their right to use cryptocurrency, setting clear rules to protect consumers, and not allowing minorities in the executive branch. Activists exploit regulatory ambiguity to illegally destroy an industry."

According to French Hill, a Republican congressman from Arkansas and one of the co-sponsors of the FIT21 bill, the legislation designs a temporary regulatory process for digital asset companies. Under this process, digital asset companies are able to submit a “notice of intent to register” to federal regulators. The measure comes as regulators work out details on how to allocate regulatory responsibilities for the cryptocurrency industry.

French Hill emphasized: “This bill imposes strict consumer protection regulations and is designed to clearly prohibit the commingling of customer funds,” noting that this will help avoid bankruptcies like FTX from happening again.

In addition, the FIT21 bill also helps clarify which digital assets should be regulated by the U.S. Securities and Exchange Commission (SEC) and which should be regulated by the Commodity Futures Trading Commission (CFTC). The two agencies have been at loggerheads for years over who has legal authority to regulate the cryptocurrency industry.

Democrats’ views on FIT21

Contrary to the bill's Republican backers, Democrats on the House Financial Services Committee said the bill would benefit "wealthy crypto companies that choose not to register with the Securities and Exchange Commission (SEC)" while hurting "ordinary investors trying to build wealth." ".

Democrats on the House Financial Services Committee, who are at odds with their Republican backers, noted that the bill could give an advantage to wealthy crypto businesses that “deliberately fail to register with the SEC” over “ordinary investors trying to build wealth through their investments.” "who" causes harm.

SEC Chairman Gary Gensler also criticized the bill, claiming that existing laws are sufficient to regulate cryptocurrencies and the industry simply refuses to comply. "We should make policy choices that protect the investing public rather than promote the business models of non-compliant companies," he said.

SEC Chairman Gary Gensler also criticized the bill. He believes that existing laws are sufficient to regulate the cryptocurrency industry. The problem is that the industry itself is unwilling to comply with these regulations. Gensler emphasized: "Our policy should be to prioritize protecting investors rather than supporting the business models of companies that do not follow the rules."

Still, a significant number of Democrats support the bill and urge their party colleagues to do the same to help the U.S. remain competitive and progressive with other countries when it comes to cryptocurrency regulation. Democratic Rep. Yadira Caraveo of Colorado said: "Although this bill is not perfect, I think it is indeed a good step in the right direction."

The Biden administration expressed its opposition to the FIT21 bill before the vote, but also expressed its willingness to work with Congress to develop a "comprehensive and balanced digital asset regulatory framework."

Notably, the government has given no indication that it intends to veto the bill if it passes both chambers, as it did with recent legislation regarding cryptocurrency banks. Like FIT21, the legislation passed the House with bipartisan support.

It is worth noting that although the Biden administration held an opposition position to the FIT21 bill before the vote, it did not indicate that it would veto it with one vote if it passed both houses of Congress. This is consistent with previous comments on some projects involving crypto banks. Business legislation has different attitudes. However, the FIT21 bill ultimately achieved bipartisan consensus in the House of Representatives and was successfully passed.

Conclusion:

With the smooth passage of the FIT21 bill in the U.S. House of Representatives, we are witnessing important steps towards legal clarity and regulatory frameworks for the cryptocurrency industry. While views on the bill are divided and may still face challenges in its passage through the Senate and eventual passage into law, it has provided a new direction and basis for discussion on the regulation of cryptocurrencies.

Regardless of the final outcome, the advancement of the FIT21 bill reflects the legislative body's attention and adaptation to the emerging field of cryptocurrency, and also reflects society's urgent need for reasonable supervision of innovative technologies. We look forward to a healthier and more stable future for the cryptocurrency industry under the protection of the law.

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