The United States House of Representatives has passed a crypto market regulatory bill that could significantly impact the U.S. regulatory landscape for digital assets if it eventually becomes law.
Called the Financial Innovation and Technology for the 21st Century Act, or FIT21, the measure was approved by the House of Representatives with a vote of 279-136.
All but three of 217 Republican House members voted in favor of FIT21, while about a third of Democrats supported the measure too, local reports said.
The bill establishes a federal framework for regulating digital assets, defining the jurisdiction between the Commodity Futures Trading Commission (CFTC) and the SEC. It also allows issuers to self-certify assets as digital commodities, among other initiatives.
Curtailing the SEC’s regulatory remit, FIT21 grants the CFTC exclusive regulatory authority over digital asset commodities. The bill outlines criteria for determining this status based on a project’s level of decentralization, considering factors such as the proportion of a token’s supply owned by a single party or the blockchain’s vulnerability to influence from a single entity.
Consequently, crypto companies and digital asset issuers would have a framework for determining whether and how their assets are securities under the terms defined by the bill, which in turn would let them know who their primary regulator could be.
The bill now progresses to a Democrat-controlled Senate, where if approved by a majority, it would be sent to President Joe Biden for approval.
Biden, in a May 22 2024 letter, vocalized discontent for the bill calling out a lack of sufficient protections for investors. Still, he called for a ‘comprehensive and balanced regulatory framework’ for digital assets, suggesting that the status quo is currently lacking.
Clarifying authority between the CFTC and SEC has been a long-held hope within the crypto industry as advocates have said existing rules are unclear. And FIT21 addresses several areas within crypto, including the treatment of trading platforms, decentralized finance, and how developers can raise funds for projects.
The passage of FIT21 comes after years of squabbling on Capitol Hill over other crypto bills, such as measures to regulate stablecoins. Last year, House Republicans established a subcommittee on digital assets with the explicit goal of creating clearer crypto rules.
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