US House of Representatives approves new regulatory bill, winning cryptocurrency

The U.S. House of Representatives approved the Financial Innovation and Technology for the 21st Century Act (FIT21) by a 279-136 vote.

The vote showed significant support from members of the Democratic Party. If passed, the FIT21 Act could significantly change the regulatory framework for digital assets in the United States, marking a significant legislative development for the cryptocurrency industry. Of the votes, 208 Republican Party members supported the bill, while 71 Democrats voted in favor.

Only three Republican Party members opposed the bill, while nearly a third of Democratic Party members supported it. This bipartisan support indicates a changing approach to cryptocurrencies on Capitol Hill.

Recently, both the House and Senate passed measures that rolled back cryptocurrency custody rules for banks established by the United States Securities and Exchange Commission (SEC). The FIT21 bill now heads to the U.S. Senate, where its future is uncertain due to the lack of a counterpart bill and varying levels of support among senators.

Obstacles ahead

Additionally, there is concern that the commission’s necessary work in regulating cryptocurrencies has not been adequately addressed. Despite this legislative progress, the United States has lagged behind in enacting comprehensive cryptocurrency regulations.

The FIT21 Act proposes a comprehensive federal framework for regulating digital assets, defining jurisdictional boundaries between the Commodity Futures Trading Commission (CFTC) and the SEC. This framework allows issuers to self-certify assets as commodities.

The bill limits the SEC’s regulator’s powers by giving the CFTC exclusive oversight of digital asset commodities. Criteria for determining the status of an asset include the level of decentralization, ownership of the token supply, and the susceptibility of the blockchain to influence by one party.

Opposition from SEC Chairman Joe Biden and some Democrats

SEC Chairman Gary Gensler expressed opposition to the FIT21 Act, arguing that it would exclude investment contracts from the definition of securities. According to the SEC, many tokens function as securities because investors expect profits based on the efforts of others.

President Joe Biden has also expressed opposition to the bill, indicating he would veto legislation that would remove SEC rules on cryptocurrency custody for banks. Additionally, Biden highlighted the lack of sufficient investor protection and called for a balanced regulatory framework.

Several Democratic members criticized the bill. Rep. Maxine Waters noted that the bill provides important exceptions to key securities laws. She noted that crypto companies avoid registration and the bill would allow them to operate without proper regulatory oversight. Rep. Brad Sherman expressed concerns that changes to the definition of a security could have a negative impact on broader financial markets.