Bipartisan Support Marks Passage of FIT21, the First Digital Asset Legislation in US Congress
Summary:
FIT21, the first digital asset legislation in the US, has passed through the House of Representatives with bipartisan support, marking a potential shift in political attitudes towards crypto regulations. The law introduces a 'dual agency' regulatory regime, with the SEC and the CFTC controlling digital assets based on the level of their underlying networks' or projects' decentralisation. Despite some concerns over potential regulatory confusion and broad authority of SEC, many agree the US needs comprehensive legislation in the crypto space. The legislation could become a decisive factor in the 2024 elections, with a significant number of voters considering cryptocurrency a major issue.
In a landmark moment, the United States Congress witnessed the passage of the first digital asset legislation known as FIT21. Despite varied political affiliations, the law was majorly backed by both Republicans and Democrats in the House of Representatives, underscoring a potential shift in political opinion in Washington, D.C. The Blockchain Association's CEO, Kristin Smith, appreciates this move as indicating a willingness for bipartisan cooperation over policies instead of leaving them solely to the Securities and Exchange Commission (SEC).
The House of Representative’s Financial Service Committee went as far as labeling the approval of FIT21 a “historic event” for the US digital asset ecosystem. Remarkably, the legislation drew broader bipartisan support than anticipated, with significant backing from a number of House Democrats including Nancy Pelosi.
Simultaneously, the SEC showed a sudden easing in its stance regarding Ethereum's spot-market exchange-traded funds, marking a significant shift in the agency's approach. This change was soon followed by an overturning of the Staff Accounting Bulletin 121 through a Congressional Review Act vote. The vote, which won the backing of influential Democrats like Chuck Schumer, eases restrictions on regulated financial organizations and companies acting as custodians for digital assets.
While the legislation opens door for a 'dual agency' regulatory regime for handling digital assets, it also raises concerns among market participants due to the potential for confusion. As part of this setup, the SEC and the Commodity Futures Trading Commission (CFTC) would regulate digital assets depending upon the decentralization of their underlying networks or projects.
While the dual-agency framework has some proponents, others fear the broad authority that the SEC currently enjoys might stifle innovation in the blockchain and crypto space.
Regulating digital assets, it appears, is no mean feat. Taking into consideration their changing nature over time, the rules of regulation have to be dynamic. The passage of FIT21, while being celebrated for creating a new statutory test of 'decentralization,' also opens up scope for differing interpretations and the possibility of disagreements about particular assets.
Despite the challenges, many agree the US needs comprehensive localization in the crypto space, as it lags behind in comparison to other regions like the EU, Switzerland, Singapore, and UAE. The lack of clear regulations appears to be impeding US citizens' access to various crypto products and services and is placing both crypto companies and users at a disadvantage.
From FIT21, it appears that politicians can ill-afford to ignore the crypto space as doing so could risk their political careers. As per a Blockchain Coinvestors report, digital asset regulation will likely be a crucial electoral issue in the 2024 US elections. With support from everyday users gaining momentum, politicians are evidently starting to pay attention to the needs of over 50 million American crypto owners.
As the 2024 US elections draw nearer, opinions differ on whether or not FIT21, or a similar law, will be enacted. While some believe the passage of the law through the Senate this year seems unlikely due to the packed legislative calendar of an election year, others believe there's still a sufficient chance. Recent polls show that cryptocurrency could become a deciding factor in swing state elections with one in five voters considering it a major issue. President Biden, for instance, expressed his readiness to collaborate with Congress on developing a well-rounded and equitable regulatory framework for digital assets. This inclination towards negotiation could provide a possible solution. However, regardless of the progressive shifts, the enactment of FIT21 still faces considerable obstacles in the Senate. Nonetheless, given the recent dissension resolution vote concerning SAB 121, its passage may still be plausible.
Published At
6/3/2024 4:15:00 PM
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