FIT21 Crypto Bill Passes US House with Bipartisan Support, Will President Biden Veto?

By Jody McDonald May 23, 2024 In Cryptocurrency Law, Law
  • The Financial Innovation and Technology for the 21st Century Act (FIT21) passed the US House, marking the first time a major crypto bill has passed either chamber of the US Congress.
  • President Joe Biden has said that although he doesn’t support the bill he would not veto it if it were to be passed by the Senate.

The Financial Innovation and Technology for the 21st Century Act (FIT21) has passed the US House of Representatives with support from both Republican and Democratic lawmakers, marking the first time a major crypto bill has ever passed either chamber of Congress. 

The final vote on the legislation was 279 to 136, with 71 Democrats—including former House Speaker Nancy Pelosi—voting to support the bill.

The purpose of FIT21 is to restructure the regulatory framework around digital assets, giving more power and funding to the Commodity Futures Trading Commission (CFTC) and changing the role of the Securities and Exchange Commission in the regulation of crypto. 

FIT21 isn’t expected to come before the Senate until after this year’s US Federal election. But if it does clear the Senate, current US President Joe Biden says he wouldn’t veto the bill if he were to be re-elected.

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Related: Congress Passes Anti-SEC Crypto Rule Resolution, Braces for White House Veto 

What Does FIT21 Do?

The purpose of FIT21 is to create a new regulatory framework for digital assets in which the CFTC would become the main crypto regulator, overseeing the non-securities, spot digital asset markets — while the SEC would continue to regulate digital assets deemed securities. 

The bill’s supporters also claim it will boost consumer protections and clarify exactly what is, and is not, a security in the digital asset space. FIT21 would also lay out a process for allowing the sale of digital assets initially sold as part of investment contracts on secondary markets.

Commenting on the passage of FIT21, Republican Representative and House Financial Services Chair Patrick McHenry said:

FIT21 provides the regulatory clarity and robust consumer protections necessary for the digital asset ecosystem to thrive in the United States. The bill also ensures America leads the financial system of the future and remains a hub for technological innovation.

Rep. Patrick McHenry, House Financial Services Chair

Representative Dusty Johnson, a Republican from South Dakota and Chair of the House’s Agriculture Subcommittee added:

Without this bill, digital asset innovation will continue to be filled with uncertainty. Today’s victory gets us one step closer to establishing clear rules of the road for developers in the industry so America can remain a global hub for tech and finance innovation.

Rep. Dusty Johnson, House Agriculture Subcommittee Chair

FIT21 Isn’t Without Criticism

While FIT21 enjoyed widespread support in the House, it wasn’t without its critics. Democratic Representative Maxine Waters, in particular, was scathing in her criticism saying the bill would condemn digital assets to a “regulatory no-man’s land” and potentially threaten the stability of the broader economy:

This is perhaps the worst, most harmful proposal I have seen in a long time…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.

Rep. Maxine Water

Related: Bitcoin’s Ride as Wild as a Rollercoaster, Gary Gensler Silent on Ethereum ETF 

Unsurprisingly SEC Chair, Gary Gensler, also doesn’t think too highly of the bill, saying it’s unnecessary and would weaken crypto regulation:

The crypto industry’s record of failures, frauds, and bankruptcies is not because we don’t have rules or because the rules are unclear. It’s because many players in the crypto industry don’t play by the rules…We should make the policy choice to protect the investing public over facilitating business models of non-compliant firms.

Gary Gensler, SEC Chair

Jody McDonald
Author

Jody McDonald

Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.

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