Members of the United States House of Representatives belonging to the Democratic Party will not be compelled to vote against two pro-crypto bills that are expected to be brought to the floor for a vote in the coming days. However, they are strongly encouraged to do so. In an email sent on May 20 by the Democratic Party leaders to house members, it was revealed that the party did not advocate for a “no” vote on the Financial Innovation and Technology for the 21st Century (FIT21) Act and the CBDC Anti-Surveillance State Act, also known as H.R. 4763 and H.R. 5403, respectively. Both bills have been seen as favorable for the crypto industry if they are passed.
The FIT21 Act aims to establish a clear process for determining whether a cryptocurrency should be classified as a commodity or a security. It also seeks to transfer regulatory control of the sector to the U.S. Commodity Futures Trading Commission (CFTC). The bill has received support from the U.S. crypto industry and lobbyists, with 60 companies endorsing it in a letter sent on May 16. On the other hand, the CBDC Anti-Surveillance State Act would prohibit the Federal Reserve from issuing a central bank digital currency.
However, the email mentioned that Representatives Maxine Waters and David Scott strongly oppose the FIT21 Act, and Waters is against the CBDC act. Politico later obtained a letter from Waters and Scott urging a vote against the FIT21 Act. The email from Democratic Party leaders expressed concerns about certain aspects of the bill, including its provision for trading digital commodities in the secondary market if they were initially offered as part of investment contract securities, as defined by the Securities and Exchange Commission (SEC) using the Howey test. They argued that this language undermines established legal precedent, creating uncertainty in the traditional securities market. The leaders also raised concerns that the bill weakens investor protections and could lead to fraud and market manipulation by providing a “safe harbor” where certain entities can register their intent, effectively shielding them from SEC oversight until crypto rules are finalized by the SEC and the CFTC.
As for the CBDC Anti-Surveillance State Act, Democratic Party leaders believe that prohibiting the issuance of CBDCs by the Federal Reserve could hinder the dominance of the U.S. dollar, as other countries are moving forward with their own CBDCs as a means to evade sanctions. They also highlighted concerns raised by the Congressional Budget Office (CBO) about the broad definition of CBDC in the bill, which could potentially undermine the Federal Reserve’s ability to conduct monetary policy, especially in managing inflation.
It is anticipated that the FIT21 Act will be debated and passed on Wednesday, May 22, according to Politico’s Eleanor Mueller.