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The cryptocurrency space scored a huge victory in Washington last week, with the House of Representatives voting in favor of a bill that would establish a framework for digital assets and clarify the respective jurisdictions of regulators. However, the legislation, titled “Financial Innovation and Technology” The 21st Century Act (FIT21) still requires Senate approval, which is expected to be low.
The U.S. House of Representatives voted overwhelmingly in favor of FIT21, 279 to 136.
However, President Joe Biden opposed the bill’s passage because it failed to “provide adequate protections for consumers and investors involved in certain digital asset transactions,” a statement said. U.S. Securities and Exchange Commission Chairman Gary Gensler also opposed the legislation, which he said was unnecessary and posed a risk to existing securities regulation.
Oppenheimer analyst Owen Lau wrote in a note to clients: “We believe strong Democratic support for this very important bill highlights the increasingly bipartisan nature of cryptocurrency policy and signals that sent a message: the status quo is not working.
A core component of FIT21 is the promotion of the Commodity Futures Trading Commission as the primary regulator for digital assets. The agency will also have exclusive regulatory authority over cash or spot markets for so-called digital goods. At the same time, the SEC’s regulatory authority will be extended to digital assets with non-decentralized blockchains. Securities regulators will also be responsible for the new rulemaking process for digital asset trading systems.
This kind of regulatory system is what the crypto world has been yearning for for years, because there are clear lines between the jurisdictions of the CFTC and the SEC.
The debate over whether cryptocurrencies should be considered securities or commodities has raged for years, demonstrating the current lack of consensus on how cryptocurrencies are regulated in the United States. If digital tokens were classified as securities, issuers and exchanges would be subject to stricter rules enforced by the SEC (such as being required to have necessary securities licenses), a prospect the cryptocurrency industry has long resisted. The SEC defines most cryptocurrencies as securities, but the CFTC considers them commodities. Both the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission consider Bitcoin (BTC-USD) a commodity, although the two regulators are less certain about Ethereum (ETH-USD)’s classification.
Rep. Josh Gottenheimer, D-N.J., one of the Democrats staunchly opposed to the White House and SEC’s Gensler, said FIT21 “clarifies the regulation of digital assets, strengthens consumer protections and ensures the U.S. continues to Stay ahead of the curve in these areas.” Innovative Technology. ”
Meanwhile, the level of opposition the bill is likely to face in the Senate remains uncertain. Oppenheimer’s Liu believes that “given the lack of similar work in the Senate and the absence of corresponding bills, current expectations for Senate passage remain low.”
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