A New Era for Crypto Regulation: House to Vote on FIT21 Bill
The House of Representatives is set to vote on a bill that could change the face of cryptocurrency regulation in the US. The Financial Innovation and Technology for the 21st Century Act, or FIT21, aims to split regulatory responsibility between the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC).
The future of crypto regulation is uncertain, but FIT21 could bring much-needed clarity.
Under the proposed legislation, the SEC would have oversight of cryptocurrencies that remain tightly controlled by their developers or small groups of owners. On the other hand, more decentralized tokens, such as Bitcoin and possibly Ether, would fall under the purview of the CFTC. This distinction is crucial, as the CFTC is geared towards serving knowledgeable institutional investors, whereas the SEC aims to protect retail investors.
The bill’s passage would mark a significant milestone in the ongoing turf war between the two agencies, providing a clear framework for regulatory disputes over crypto. Additionally, FIT21 seeks to strengthen transparency and accountability among crypto exchanges, brokers, and dealers, while providing a compliant way for blockchain developers to raise funds.
According to the Congressional Research Service, a blockchain is considered decentralized if no individual has unilateral authority to control it, and no issuer or affiliated person controls 20% or more of the digital asset or its voting power. However, the distinction between decentralized and non-decentralized blockchains is not always clear-cut, and the bill’s language leaves room for interpretation.
Decentralization is a key factor in determining which agency will regulate a cryptocurrency.
Despite the uncertainty surrounding the bill’s prospects in the Senate, supporters are optimistic about its chances. Rep. French Hill (R-Ark.), who chairs the subcommittee on digital assets, believes that FIT21 is a critical step towards establishing a federal regulatory framework for digital assets in the US. The bill has garnered support from 60 digital-asset organizations and companies, including crypto exchanges Coinbase and Kraken, and venture capital firm Andreessen Horowitz.
The crypto market is eagerly awaiting the outcome of the FIT21 vote.
While FIT21 is not a perfect bill, it represents a significant step towards clarity and consistency in crypto regulation. As the industry continues to evolve, it is essential that regulatory frameworks keep pace. The outcome of the FIT21 vote will be closely watched, and its impact on the crypto market could be significant.
