The U.S. House of Representatives is approaching a vote on the Financial Innovation and Technology for the 21st Century Act (FIT21), which aims to regulate the cryptocurrency industry.
The Crypto Council for Innovation, a coalition of digital assets organizations and companies, including Coinbase, Kraken, Andreessen Horowitz, and the Digital Currency Group, has written a letter to Speaker of the House Mike Johnson (R-La.) and Minority Leader Hakeem Jeffries (D-N.Y.), urging support for the bill. The vote is expected mid-week, with the bill authorized for floor time next week.
Key Provisions of FIT21
The FIT21 bill proposes to designate the Commodity Futures Trading Commission (CFTC) as the primary regulator of digital assets and define the divisions of responsibility between the CFTC and the Securities and Exchange Commission (SEC). The bill includes provisions for consumer protections, such as rules for the custody of customers’ assets and their treatment in bankruptcy. It also sets up additional guardrails against risky behavior in the cryptocurrency sector.
According to the Crypto Council for Innovation letter, passing this legislation would enhance the growth of blockchain technology and digital assets while ensuring financial inclusion and national security. The letter emphasizes the need for the U.S. to maintain its leadership in financial innovation.
The crypto industry recently saw success when the House and Senate passed a resolution overturning a crypto accounting policy from the SEC. However, President Joe Biden vowed to veto the effort. This move to erase the SEC’s Staff Accounting Bulletin 121 (SAB 121) received significant bipartisan support, with more than one in five Senate Democrats voting in favor, including Majority Leader Chuck Schumer (D-N.Y.).
However, the comprehensive FIT21 legislation is a more extensive regulatory framework. Key Senate Democrats have not shown the same support for the House’s effort. The Senate has indicated a potential willingness to consider a different crypto bill related to stablecoin issuers as part of a broader financial legislation package.
Democratic Support and Amendments
Rep. Patrick McHenry (R-N.C.), chairman of the House Financial Services Committee where the bill originated, noted that Democratic support in the House could influence Senate action. When the measure cleared his committee, it did so with some Democratic backing despite opposition from senior member Rep. Maxine Waters (D-Calif.). As the bill moves towards a floor vote, the House Rules Committee has called for a range of amendments to be submitted by the May 16 deadline.
