US House Passes FIT21 Crypto Bill With Bipartisan Support, Biden Does Not Threaten Veto

A majority of US House of Representatives members voted in favor of legislation to establish regulatory clarity over digital assets, CoinTelegraph reports.

In a 279 to 136 vote on May 22, House lawmakers approved H.R.4763, or the Financial Innovation and Technology for the 21st Century (FIT21) Act. If passed by the Senate and signed into law, the bill clarifies the roles the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have over digital assets. 71 Democrats joined with 208 Republicans to vote in favor of the bill.

“Unfortunately, our current regulatory framework is preventing digital assets’ innovation from reaching its full potential,” said Representative Patrick McHenry before the House vote. “The SEC and the CFTC are currently in a food fight for control of these asset classes.”

Maxine Waters, also speaking before the floor vote, said she intended to oppose the legislation. She claimed the FIT21 bill would send cryptocurrencies to a “regulatory no man’s land,” adding that the language would allow traditional finance firms to operate without SEC oversight.

“This [bill] is perhaps the worst, most harmful proposal I have seen in a long time,” said Representative Waters. “This bill would deregulate crypto and certain traditional securities to the extent that I and other experts have expressed serious concerns about this bill causing a potential market crash and recession.”

Who benefits from the passage of the #NotFIT4PurposeAct:
✅Wealthy #crypto firms that have chosen not to register w/the @SECGov or otherwise comply w/the securities laws

Who stands to lose:
❌Ordinary investors trying to build wealth

— U.S. House Committee on Financial Services (@FSCDems) May 22, 2024

Meanwhile, the White House is against the U.S. House of Representatives passing the FIT21 bill, but the president isn’t threatening to veto it, in a positive sign for the crypto industry.

Biden’s White House published a statement of administrative policy Wednesday saying the administration opposed the passage of the Financial Innovation and Technology for the 21st Century Act, citing concerns over a lack of investor protections should it make its way through Congress. The bill also suggested the White House would want to work with Congress on future legislation addressing the crypto markets, in contrast with previous statements from Securities and Exchange Commission Chair Gary Gensler, who has repeatedly said he does not believe the industry needs additional legislation specific to crypto.

“The Administration is eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, which will promote the responsible development of digital assets and payment innovation and help reinforce United States leadership in the global financial system,” the statement said. “H.R. 4763 in its current form lacks sufficient protections for consumers and investors who engage in certain digital asset transactions.”

This is the second statement of administrative policy the administration has published in recent weeks, after threatening a veto against a bill looking to overturn controversial SEC accounting guidance. That bill sailed through the House and Senate.

The statement came hours after the SEC’s Gensler published his own opposing statement on the legislation, saying it would harm the regulator’s efforts to police traditional capital markets as well as crypto markets.

FIT21 would redefine how securities issuers have to comply with existing federal law and Supreme Court precedent, the SEC chair said in his statement.

The bill’s advocates say U.S. law doesn’t allow for crypto companies to operate without the threat of civil litigation, a view Gensler described as these companies trying to get out of meeting disclosure and other compliance requirements for securities issuer.

The bill would create a new definition specific to digital assets, to identify when they’re securities or digital commodities and whether the SEC or Commodity Futures Trading Commission should be the primary spot market regulator. The full House is set to take up the bill later Wednesday, with a vote scheduled for this afternoon.

The House is still set to discuss and vote on H.R. 5403, the Central Bank Digital Currency (CBDC) Anti-Surveillance State Act, which would prohibit the Federal Reserve from issuing a digital dollar through intermediaries. Democratic Party leadership reportedly said on May 21 that it was not in favor of its members voting to pass the anti-CBDC bill or the FIT21 bill, but it would not whip against the legislation.

Crypto-related legislation and the SEC’s pending decision on a spot Ether exchange-traded fund comes as the United States moves deeper into an election year, with digital assets on many voters’ minds. President Joe Biden and former President Donald Trump, the presumptive candidates for the Democratic and Republican Parties in 2024, have agreed to two debates on June 27 and Sept. 10.