US House Passes FIT21 Act for Digital Asset Regulation

In a significant move towards regulatory clarity for digital assets, the United States House of Representatives passed the Financial Innovation and Technology for the 21st Century (FIT21) Act on May 22. 

The legislation, known as H.R.4763, was approved by a vote of 279 to 136. If the bill is passed by the Senate and signed into law, it will delineate the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in overseeing digital assets. 

US House Passes Bill with Bipartisan Support

The bill garnered bipartisan support, with 71 Democrats joining 208 Republicans in favor of the measure.

“Unfortunately, our current regulatory framework is preventing digital assets’ innovation from reaching its full potential,” said Representative Patrick McHenry before the House vote. McHenry emphasized the ongoing conflict between the SEC and CFTC over jurisdiction, describing it as a “food fight” for control over digital asset classes.

Maxine Waters Expresses Opposition

Representative Maxine Waters expressed strong opposition to the legislation, warning that the FIT21 bill could lead digital assets into a “regulatory no man’s land.” She argued that the bill’s language could allow traditional financial firms to operate without sufficient SEC oversight, potentially leading to significant market instability.

“This [bill] is perhaps the worst, most harmful proposal I have seen in a long time,” Waters stated. “This bill would deregulate crypto and certain traditional securities to the extent that I and other experts have expressed serious concerns about this bill causing a potential market crash and recession.”

US House to Vote on CBDC Bill

The US House is also set to discuss and vote on H.R. 5403, the Central Bank Digital Currency (CBDC) Anti-Surveillance State Act, which aims to prohibit the Federal Reserve from issuing a digital dollar through intermediaries. Despite the Democratic Party leadership’s reservations about both the FIT21 bill and the anti-CBDC bill, they have decided not to enforce a strict party-line vote.

The passage of crypto-related legislation, including the SEC’s pending decision on a spot Ether exchange-traded fund (ETF), comes as the United States approaches a critical election year. Digital assets are becoming an increasingly important issue for voters.

The US President Joe Biden and former President Donald Trump, the likely candidates for the Democratic and Republican Parties in 2024, have agreed to participate in two debates scheduled for June 27 and September 10.

Clear Framework for Crypto in the US 

The FIT21 Act aims to provide a clear regulatory framework that supporters believe is necessary to foster innovation and protect consumers in the rapidly evolving digital asset market. The proposed legislation seeks to resolve the ongoing jurisdictional disputes between the SEC and the CFTC, which have created uncertainty and hindered the growth of the digital asset sector.

Proponents of the FIT21 Act argue that a well-defined regulatory environment will encourage investment and technological advancement, ensuring the US remains a leader in the global digital economy. They assert that the current fragmented approach to regulation has stifled innovation and created confusion among market participants.