The cryptocurrency industry is experiencing a significant milestone with the successful passing of the Financial Innovation and Technology for the 21st Century Act (FIT21) by the U.S. House of Representatives. This groundbreaking bill, supported by Republicans, garnered a bipartisan vote of 279 in favor and 136 against.
As the presidential election draws near, there has been a growing political interest in regulating cryptocurrencies. The FIT21 Act is the first of its kind in the country and represents a significant effort to bring clarity and order to the crypto market.
Notably, 71 Democrats, including former House Speaker Nancy Pelosi, showed their support for the bill by voting in favor of it. However, 133 Democrats opposed it. On the Republican side, only three representatives opposed the bill, while 208 supported it.
The primary objective of the FIT21 Act is to resolve the regulatory conflict between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Republican Representative Patrick McHenry of North Carolina, who co-sponsored the bill, emphasized that it would put an end to the ongoing “food fight for control” over crypto regulation. The CFTC, which is perceived as more industry-friendly, would gain additional jurisdiction.
Despite the Biden administration’s opposition to the bill, it did not threaten to veto it. The administration argued that the bill lacked adequate safeguards for consumers and investors. However, it expressed its willingness to collaborate with Congress to develop a comprehensive regulatory framework.
Democratic Representative Maxine Waters of California criticized the FIT21 Act, calling it a “wish list of big crypto” and asserting that it does not deserve support. She warned that the bill could create a “regulatory no-man’s land” without a primary regulator, potentially leading to a recession. Similarly, Massachusetts Democrat Stephen Lynch described the bill as a “radical rewrite of the securities laws” and expressed concerns about the potential impact of crypto market volatility on traditional financial markets.
The FIT21 Act has received support from the industry, with the Blockchain Association highlighting the lack of clear regulations as a barrier to innovation. In a letter addressed to Senate lawmakers, the association emphasized the need for a comprehensive regulatory framework.
Blockchain Association CEO Kristin Smith hailed the passage of the bill as a validation of the crypto industry in the United States by Congress. Last week, numerous crypto firms, including Coinbase and Kraken, signed a letter organized by the Crypto Council for Innovation in support of FIT21.
SEC Chair Gary Gensler, known for his tough stance on the industry, expressed concerns that the bill could pose risks to markets and investors. He argued that FIT21 would undermine established oversight practices for investment contracts, potentially placing investors and capital markets at great risk.