The Financial Innovation and Technology for the 21st Century Act (FIT21), also known as H.R. 4763, was passed by the House on May 22. The bill received support from 71 Democrats and 208 Republicans, while 136 opposed it.
The bill’s future in the Senate remains unclear, especially since there is no companion bill and it faces opposition from prominent crypto critic Elizabeth Warren. Notably, the Senate recently passed a resolution to nullify a rule restricting banks and crypto firms from conducting business together.
The Senate may take months to consider FIT21, as there is no deadline for action. If the Senate does consider it, the bill will likely be reviewed, subjected to hearings, and possibly revised by a committee. For it to pass, it needs a majority vote of 51 senators.
If there are changes, House and Senate members will need to reconcile differences between their versions of the bill before it can be approved again by both chambers.
Once the bill reaches President Biden, he will have ten days to sign or veto it. Although the administration expressed opposition to the bill on May 22, it did not explicitly state that Biden would veto it.
If Biden vetoes FIT21, the House and Senate could override the veto with a two-thirds majority vote in both chambers.
See Related: US Crypto Market At Crossroads As House Prepares To Vote On Bill
Market Stability And Opposition
Despite SEC Chair Gary Gensler’s opposition, stating the bill would create regulatory gaps and threaten market stability, its passage in the House is seen as a positive step for the crypto industry. Coinbase CEO Brian Armstrong celebrated the bipartisan support, calling it a victory for clear crypto regulations.
Variant Fund’s legal chief, Jake Chervinsky, highlighted the significant number of Democrats voting against the current SEC approach. However, crypto lawyer Gabriel Shapiro cautioned that FIT21 still grants substantial power to the SEC and creates a dual regulatory regime with the CFTC, giving it new authority over the spot commodities market.
In essence, FIT21 would mainly place crypto oversight under the Commodity Futures Trading Commission, which is viewed by the industry as more lenient than the SEC. The SEC would still regulate cryptocurrencies that are not sufficiently decentralized but FIT21 would also provide a mechanism for some cryptocurrencies to be sold as commodities.
