The U.S. House of Representatives is scheduled to vote on the Financial Innovation and Technology for the 21st Century Act (HR 4763), also known as FIT21, by the end of this month.
According to a letter from a16z, this bill aims to clarify cryptocurrency regulations by delineating the responsibilities of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), thereby establishing a clear regulatory framework for digital assets.
Despite some industry concerns regarding the stringent requirements for decentralization and potential jurisdictional overlaps, the bill is considered a crucial step toward achieving regulatory clarity.
This bipartisan legislation has garnered support from both the House Committee on Financial Services and the House Committee on Agriculture.
FIT21 aims to delineate which digital assets fall under SEC regulation as securities and which fall under CFTC regulation as commodities. The bill suggests that an asset will be considered a security if the blockchain it is based on has not reached an adequate level of decentralization.
Additionally, the bill introduces consumer protection measures for crypto exchanges, including the segregation of customer funds, lock-up periods for token insiders, and stringent disclosure requirements.
Amid the ongoing regulatory uncertainty in the U.S., the SEC has positioned itself as the primary regulator of the crypto industry, initiating numerous enforcement actions against crypto-related firms. Notable examples include lawsuits against major exchanges like Coinbase and Binance.
In response to the lawsuit against Coinbase, the exchange argued that the SEC’s classification of the cryptocurrencies listed on its platform as securities is an overreach. Coinbase is making a final effort to have the lawsuit dismissed.
The CEO of Binance noted that their lawsuit with the SEC resulted in banking institutions withdrawing support, causing significant operational disruptions for the exchange.
Ripple is also continuing its legal battle with the SEC, with its case now entering the remedies phase. The broader crypto community has criticized these enforcement actions, calling for clearer regulatory guidelines. The House Financial Services Committee revealed on May 10 that it intends to evaluate the FIT21 Act.
Chairman Patrick McHenry of the House Financial Services Committee highlighted the significance of the FIT21 Act in resolving current regulatory ambiguities.
“For far too long, the U.S. digital asset ecosystem has been plagued by regulatory uncertainty that has stifled innovation and left consumers unprotected.”
U.S. Rep. Patrick McHenry said.
Earlier, crypto.news reported that CFTC Chairman Rostin Behnam had called on Congress to establish clearer guidelines for crypto regulations, emphasizing the necessity of addressing regulatory gaps.
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