A bill that aims to define the responsibilities of the United States securities and commodities regulator in regulating cryptocurrency is making its way to the Senate and eventually to President Joe Biden’s desk. The bill, known as the Financial Innovation and Technology for the 21st Century Act (FIT21) or H.R. 4763, was passed in the U.S. House of Representatives on May 22. The vote saw 71 Democratic representatives and 208 Republicans in favor, while 136 representatives were against it.
The bill’s future in the Senate is uncertain, as there is currently no companion bill and it faces opposition from Senator Elizabeth Warren, one of the country’s prominent critics of cryptocurrency. However, on May 16, the Senate passed a resolution calling for the removal of a rule that restricts banks and crypto firms from conducting business.
It could be several months before the bill is considered by the 100-member Senate, as there is no specific timeline for when senators must take action. If the bill moves forward, it will likely be assigned to a committee for further review, hearings, and potential revisions. To pass, the bill would require a majority vote of 51 senators in favor.
There is a possibility that certain parts of FIT21 may undergo changes as House and Senate members come together to reconcile any differences between their versions of the bill. Once this process is complete, the bill will return to Congress for final approval.
After that, President Biden will have 10 days to either sign the bill into law or veto it. The Biden administration has expressed opposition to the bill but has not indicated whether a veto would be issued. Even if the bill is vetoed, it could still be passed through both chambers of Congress with a two-thirds majority vote to override the veto.
The cryptocurrency industry has welcomed the passage of FIT21 in the House of Representatives. However, the Chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, publicly opposed the bill, stating that it creates regulatory gaps and poses risks to the stability of capital markets. Despite this opposition, the bill’s passage with support from 71 Democrats is seen as a significant victory for the crypto industry.
Brian Armstrong, the CEO of Coinbase, described the bill’s passage as a “total victory” and a win for clear regulations in the crypto space. Many view the large number of Democrats voting against the bill as a vote of no confidence in the current SEC.
However, not everyone is celebrating. Crypto-focused lawyer Gabriel Shapiro argues that FIT21 would still grant the SEC significant power. He highlights that the bill establishes a dual regulatory regime, with the Commodity Futures Trading Commission (CFTC) gaining regulatory authority over spot commodities markets. While the CFTC is seen as a more relaxed regulator compared to the SEC, the latter would still have regulatory power over cryptocurrencies that are not considered sufficiently decentralized. FIT21 would also create a framework for selling cryptocurrencies as commodities if they are deemed securities.
Overall, proposed crypto regulations in the U.S. are driven by lawmakers’ fear and doubt surrounding the industry. FIT21 represents an attempt to establish clear rules and regulatory oversight in the cryptocurrency space.