Crypto Legal Clarity Will Be Provided After FIT21 Bill Passes With Two Thirds Majority

Legislation known as the Financial Innovation and Technology for the 21st Century Act (FIT21) was approved by the U.S. House of Representatives on Monday, offering much-needed legal clarity on the classification, registration, and custody of crypto assets.

FIT21 received overwhelming support by Republicans and garnered 71 additional votes via Democrats, resulting in a final count of 279 yes to 136 no. The proponents of the bill aim to put an end to the approach by the SEC in terms of regulating the crypto industry through enforcement actions.

A Step In The Right Direction

Regarded as a significant step in crypto regulation, industry leaders hailed the bill as a crucial move towards establishing clear rules for digital asset trading and registration. Coinbase CEO Brian Armstrong lauded the legislation on X, emphasizing the importance of protecting consumer rights in using crypto and ensuring regulatory clarity to prevent misuse.

According to Representative French Hill (R-AR), the bill introduces an interim oversight mechanism for digital asset firms to file a notice of intent to register with federal regulators while regulatory responsibilities are being sorted out. Hill stressed that the main focus of the bill will be on stringent consumer protections to prevent incidents like the collapse of FTX. Moreover, the legislation aims to delineate which digital assets fall under the jurisdiction of the SEC and the Commodities and Futures Trading Commission (CFTC), resolving long-standing disputes over regulatory authority.

A Mixed Bag For Democrats

Democrats on the House Financial Services Committee expressed concerns that the bill would favor wealthy crypto firms avoiding SEC registration at the expense of ordinary investors. SEC Chairman Gary Gensler criticized the bill, arguing that existing laws are sufficient for crypto regulation and that the industry needs to comply with them rather than seeking further regulatory clarity.

Despite some opposition, a considerable number of Democrats supported the bill, emphasizing its importance in keeping the nation competitive in crypto regulation. The Biden administration initially opposed FIT21 but expressed willingness to collaborate with Congress on a comprehensive regulatory framework for digital assets.

It is also worth mentioning that, unlike recent crypto banking legislation, the administration did not indicate plans to veto FIT21, which passed the House with bipartisan support.