The vote showed significant support from Democratic members. If enacted, the FIT21 bill could significantly alter the regulatory framework for digital assets in the United States, marking a notable legislative development for the cryptocurrency industry. Among the votes, 208 Republican members supported the bill, and 71 Democrats also voted in favour.
Only three Republican members opposed the bill, while nearly a third of Democratic members supported it. This bipartisan support indicates a shift in attitudes toward cryptocurrency 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 is now set to proceed to the US Senate, where its future is uncertain due to the absence of a counterpart bill and varying levels of support among Senators.
Obstacles ahead
Additionally, there is a concern that the necessary committee work on cryptocurrency regulation has not been adequately addressed. Despite this legislative progress, the US remains behind in establishing comprehensive cryptocurrency regulations.
The FIT21 bill 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 regulatory authority, granting the CFTC exclusive oversight of digital asset commodities. The criteria for determining an asset’s status include the level of decentralization, token supply ownership, and the blockchain’s susceptibility to influence by a single party.
Opposition from SEC Chair, Joe Biden, and some democrats
SEC Chair Gary Gensler has expressed opposition to the FIT21 bill, 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 voiced opposition to the bill, indicating that he would veto legislation that removes SEC rules on cryptocurrency custody for banks. Additionally, Biden has highlighted the lack of sufficient investor protections and called for a balanced regulatory framework.
Several Democratic members have criticized the bill. Representative Maxine Waters has pointed out that the bill provides significant exemptions from crucial securities laws. She noted that crypto companies are avoiding registration, and the bill would allow them to operate without proper regulatory oversight. Representative Brad Sherman expressed concerns that changes to the definition of a security could negatively impact the broader financial markets.
