FIT21, the first digital asset legislation in United States history, has passed in the House of Representatives with strong bipartisan support. The legislation received 71 Democratic votes and 208 Republican votes, signaling a willingness for both parties to come together and for Congress to take the lead on policy-making instead of the Securities and Exchange Commission (SEC). This development suggests a changing political landscape in Washington, D.C., with the crypto industry becoming more organized and better equipped to advocate for smart policies.
The passage of FIT21 is considered a watershed moment for the U.S. digital asset ecosystem, according to the U.S. House of Representative’s Financial Service Committee. The legislation received even more bipartisan support than expected, with a third of House Democrats, including Speaker Emerita Nancy Pelosi, showing their support.
However, the passage of FIT21 coincided with the SEC’s change of heart on Ether, as it approved Ethereum spot-market exchange-traded funds. Additionally, the Congressional Review Act vote to overturn Staff Accounting Bulletin 121 further eases regulations for financial institutions and firms to act as custodians of digital assets.
One potential concern with FIT21 is its “dual agency” regulatory regime, which assigns regulation of digital assets to either the SEC or the Commodity Futures Trading Commission (CFTC) based on the decentralization of their underlying networks or projects. This dual-agency structure may cause confusion among market participants, and it is hoped that the Senate will further explore this issue as they draft their own legislation.
While some believe that FIT21 will curtail the SEC’s authority over the crypto space and foster blockchain innovation, others argue that it still gives the SEC significant power in U.S. crypto regulation. The legislation’s framework creates a limiting principle for SEC jurisdiction, but there may be disagreements and different interpretations regarding its application to specific assets.
Regulating digital assets is a complex task, as tokens can change their form and function over time. Determining whether a token falls under SEC or CFTC jurisdiction depends on factors such as how it was acquired or who holds it. This complexity raises concerns and highlights the need for comprehensive crypto regulation in the United States.
FIT21’s passage emphasizes the importance of crypto supervision for U.S. politicians. It sends a message that being anti-crypto is a losing platform, and it predicts that digital asset regulation will be a key electoral issue in 2024. The increasing support from everyday users who own or invest in crypto is influencing Washington’s stance on the matter.
While there is a possibility that FIT21 or a similar legislation could become law in 2024, it would be a challenging task given the limited time left on the legislative calendar in an election year. However, there are shifting winds in favor of crypto regulation, and negotiations may lead to a workable legislative solution. President Biden’s willingness to work with Congress on a regulatory framework for digital assets is a positive sign.
In conclusion, FIT21’s passage in the House of Representatives with bipartisan support reflects the changing political landscape and the growing influence of the crypto industry. While there are still challenges ahead, the momentum is shifting towards comprehensive crypto regulation in the United States.