In a significant move that underscores the growing acceptance of cryptocurrency in legislative circles, the U.S. House of Representatives has passed the Financial Innovation and Technology for the 21st Century Act (FIT21), a piece of legislation that seeks to redefine the regulatory framework for digital currencies. The bill, which passed with strong bipartisan support in a vote of 279-136, aims to transition the oversight of cryptocurrencies from the Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC), a move seen as favorable by the crypto industry.
The FIT21 Act represents a pivotal shift in the treatment of digital assets, categorizing them more broadly as commodities rather than securities. This legislative decision aligns with the preferences of many within the cryptocurrency sector who view the CFTC as a more sympathetic and appropriate regulatory body for their operations compared to the SEC, which has taken a more stringent approach.
Despite clearing the House, the bill faces uncertain prospects in the Senate, and if passed, would require the endorsement of President Joe Biden to become law. The President’s decision is particularly noteworthy given the ongoing crackdown on crypto initiated by his administration and led by the SEC.
The White House and SEC have expressed concerns about the FIT21 Act, particularly regarding consumer protection in cryptocurrency transactions. SEC Chair Gary Gensler criticized the bill for potentially creating regulatory gaps and undermining established financial oversight mechanisms, such as the Howey Test, which determines what constitutes a security.
Gensler argued that the bill might enable crypto operators to “self-certify” their products, bypassing stringent regulatory checks, which could expose investors and the broader financial markets to increased risks. He highlighted the recent turmoil within the crypto industry—marked by notable failures, frauds, and bankruptcies—as a cautionary backdrop against loosening regulations.
House Majority Whip Tom Emmer, however, lauded the passage of the FIT21 Act, emphasizing that it establishes a globally competitive framework that will foster innovation within the American digital asset space. According to Emmer, this framework will provide the clarity and assurance needed for entrepreneurs to thrive domestically while aligning future web developments with American values.
As the bill progresses to the Senate, the cryptocurrency industry and its observers are closely watching the developments, understanding that the outcome could significantly influence the landscape of digital asset regulation in the United States.
