- The U.S. House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21), a crypto market structure bill aimed at regulating the crypto industry at large
- The bill would grant more power and funding to the Commodity Futures Trading Commission (CFTC) to oversee crypto spot markets and digital commodities like bitcoin
- The bill faced criticism from House Financial Services Committee Ranking Democrat Maxine Waters, who called it one of the worst bills she’s ever seen, and SEC Chair Gary Gensler, who said it would create gaps in regulation
The U.S. House of Representatives passed a crypto market structure bill that aims to regulate the industry at large, marking the first time comprehensive crypto legislation has been voted on in the full House.
House votes to pass FIT21 bill
The House voted 279 to 136 on Wednesday to pass the Republican-led Financial Innovation and Technology for the 21st Century Act, also known as FIT21.
FIT21 would grant more power and funding to the Commodity Futures Trading Commission to oversee crypto spot markets and digital commodities, particularly bitcoin. The bill also creates a process to allow for the secondary market trading of digital commodities if they were initially offered as part of an investment contract. Stablecoins and anti-money laundering provisions are also in the bill.
Though FIT21 is unlikely to be brought up in the Senate this year, the bill could set the stage for the next Congress in January.
Criticism of the bill
House Financial Services Committee Ranking Democrat Maxine Waters told the House Rules Committee on Tuesday that FIT21 was one of the worst bills she’s ever seen.
FIT21 would stretch the CFTC’s resources, weakening the agency’s enforcement of the industry, Waters said. The SEC has 4,500 staff members, according to its website, while the CFTC has only around 700 employees, according to a fiscal year 2024 budget document.
SEC Chair Gary Gensler has also criticized FIT21 and said it would create new gaps in regulation and throw away the Howey Test, a 1946 US Supreme Court case frequently cited by the SEC in cases involving crypto to determine whether an asset qualifies as an investment contract, and therefore a security.
What’s next
There is not a companion bill for FIT21 in the Senate, and top lawmakers in the Democrat-controlled Senate have not shown interest in the bill or have opposed it in the past.
Investment bank TD Cowen said earlier this month the bill stood no chance of becoming law in this Congress, but noted it could shed light on how Democrats and Republicans view critical issues such as anti-money laundering and investor protections.
Meanwhile, lawmakers have forged ahead on stablecoin legislation in the House and Senate. In the House there has been disagreement on who should be the primary regulator of stablecoins, and talks have been in a holding pattern.
Conclusion
The vote on FIT21 comes after some bipartisan support for crypto regulation, such as a measure withdrawing a Securities and Exchange staff accounting bulletin. However, FIT21 faces an uphill battle in the Senate. The bill could influence future crypto policy, but comprehensive legislation remains elusive in this Congress.
