Key Takeaways:
On Wednesday, the crypto industry recorded its biggest-ever win in the United States after the House of Representatives passed a bill that aims to create a new far-reaching legal framework for the digital assets market.
US House Pass FIT21 Act, Establishing Robust Legal Framework for the Crypto Industry
The Republican-sponsored Financial Innovation and Technology for the 21st Century Act (FIT21) was passed in a bipartisan 279-136 votes that saw the Democrat aisle cross enemy lines to support it.
FIT21 Act also marks the first time that a major cryptocurrency bill has cleared one of the chambers of Congress. The bill’s supporters claim that it will provide much-needed regulatory clarity for crypto and help promote the growth of the industry in the country.
The bill is now headed to the Senate, where its future is under scrutiny as no counterpart bill supports it. Since the Senate committees responsible for overseeing the crypto industry haven’t done the same level of work as the House counterparts, it is unclear whether there will be any supporters for the bill.
Despite Wednesday’s victory, the US still lags behind other global jurisdictions when it comes to establishing crypto regulations and implementing regulatory oversight over the niche sector.
Overall, 208 Republicans and 71 Democrats voted in favor of the FIT21 Act, while 3 Republicans and 133 Democrats voted against the bill.
SEC Chairman Says the Bill Could Endanger Existing Securities and Consumer Protection Laws
President Joe Biden came out lashing the bill in a policy statement. However, he is not expected to veto the bill. The Biden administration said FIT21 “lacks sufficient protections for consumers and investors who engage in certain digital asset transactions”.
At the same time, Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), is strongly against the legislation. In a public statement, the former Goldman Sachs official argued that the bill was unnecessary and endangered exiting federal securities regulations.
He said FIT21 would create “new regulatory gaps” and undermine “decades of precedent” regarding the oversight of investment contracts, putting investors and capital markets at “immeasurable risk”.
Taking into account the high-profile crypto-related prosecutions, fraud cases, bankruptcies, and failures over the years, Gensler maintained that cryptocurrencies should be subject to the same laws as other investment vehicles, such as securities.
He also warned that under the FIT21 Act, investment contracts recorded on a blockchain would no longer be deemed securities by the SEC, denying investors protection under federal securities laws.
One of Gensler’s main criticisms against the bill was that it would allow issuers of crypto investment contracts to certify by themselves that their products are digital commodities without being subject to oversight by the SEC.
Rep. Maxine Waters, a Demonrat from California who voted against the bill, said the legislation would let crypto businesses avoid responsibility and by law be able to ignore securities laws.
Voicing her disgust for the crypto bill, Waters criticized the Republicans for choosing to reward illegal activities conducted by the industry. “They (crypto firms) have already made billions of dollars unlawfully issuing or facilitating the buying and selling of crypto securities.
FIT21 Would Install the CFTC as the Leading Regulator for Crypto Assets and Spot Markets
The Financial Innovation and Technologies for the 21st Century Act would establish a robust regulatory regime to oversee the US crypto market. It will set standards for consumer protection, and install the Commodity Futures Trading Commission (CFTC) as the leading regulator for crypto assets and watchdog of the non-securities spot markets.
The latter would clearly define the nature of cryptocurrencies as a security or a commodity, which has been a major point of argument among federal regulators.
Prior to Wednesday’s voting, several members of the House, including Representatives Greg Casar (D-Texas), Brittany Pettersen (D-Colorado), Ralph Norman (R-South Carolina), and Scott Perry (R-Pennsylvania) debated making amendments to the bill. All except one of the changes proposed was adopted by the House, which was Casar’s amendment to change a crowdfunding exemption from $75 million to $5 million.
More News: ZkSync Is Planning For A Token Generation This Week, Followed By An Airdrop In June
