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House Passes FIT21 Bill To Provide Crypto Legal Clarity With Two Thirds Majority
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House Passes FIT21 Bill To Provide Crypto Legal Clarity With Two Thirds Majority
May 22, 2024 3:20 PM

The U.S. House of Representatives passed legislation on Monday that will provide long-sought-after legal clarity around how crypto assets should be classified, registered, and custodied.

The bill, titled the Financial Innovation and Technology for the 21st Century Act (FIT21), received near unanimous support from Republicans alongside 71 additional votes from Democrats, resulting in a final tally of 279 yea to 136 nay.

A Historic Step For Crypto Regulation

Crypto industry leaders widely praised the legislation as a first step towards clear, fit-for-purpose rules pertaining to digital asset trading and registration.

“Americans want to know their representatives are protecting their rights to use crypto, creating clear rules to protect consumers, and wont let the lack of clarity be weaponized by a few activists in the administration trying to unlawfully kill an industry,” tweeted Coinbase CEO Brian Armstrong on Wednesday, before the vote.

According to one of the bill’s authors, French Hill (R-AR), the legislation includes an interim oversight process for digital asset firms whereby they may file a ‘notice of intent to register’ with federal regulators as rules around how agencies divvy responsibility of the industry are finalized.

“This bill imposes strict consumer protections that do not allow commingling of customer funds,” added Hill, noting that it would help prevent another FTX-like collapse.

It also helps clarify which digital assets should be regulated by the Securities and Exchange Commission (SEC) versus the Commodities and Futures Trading Commission (CFTC), both of which have bickered over their rightful jurisdiction of the industry for years.

What Democrats Think Of FIT21

Contrary to the bill’s Republican supporters, Democrats on the House Financial Services Committee said the bill would benefit “wealthy crypto firms that have chosen not to register with the Securities and Exchange Commission (SEC),” while hurting “ordinary investors trying to build wealth.”

SEC chairman Gary Gensler also criticized the bill, claiming that the laws on the books are sufficient to regulate crypto, and that the industry simply refuses to comply with them. “We should make the policy choice to protect the investing public over facilitating business models of non-compliant firms,” he argued.

A significant number of Democrats supported the bill, however, urging their party members to do the same to help the nation keep pace with rivals on crypto regulation and progress. “This is not a perfect bill, but I believe it is a good step in the right direction,” said Rep. Yadira Caraveo (D-CO) on the matter.

The Biden administration said that it opposed FIT21 prior to the vote, but that it would work with Congress on a “comprehensive and balanced regulatory framework for digital assets.”

Notably, the administration did not signal intent to veto the bill should it pass through both chambers, as done with recent crypto legislation around crypto banking. As with FIT21, the legislation passed the House with bipartisan support.

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