On May 22, the US House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21), a comprehensive bill that sets regulations for digital asset markets. The vote saw significant bipartisan support, with 71 Democrats joining 208 Republicans in favor of the bill. However, 133 Democrats and 3 Republicans voted against it.
The approval of FIT21 in the House now shifts attention to the US Senate, where the fate of the legislation is uncertain. Currently, there’s no similar bill in the Senate, and it’s unclear if there’s enough support for it.
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FIT21 passes the House 279 – 136 🎉
House Democrats voting in favor of this bill: 71.
That is a *huge* number of elected Democrats voting “no confidence” in the current SEC, and sending a message to the Biden administration that “anti-crypto” is a losing platform this year. pic.twitter.com/zmlD1VRQfF
— Jake Chervinsky (@jchervinsky) May 22, 2024
What is the FIT21 Crypto Bill?
The House Agriculture Committee and the House Financial Services Committee produced the FIT21 bill. It aims to clearly define how the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) can regulate crypto as commodities and securities by creating registration regimes for each. The legislation also aims to ensure that crypto issuers provide disclosures and information.
Moreover, it offers issuers a clear path to raising funds and clarifies the relevant regimes for each issuer. FIT21 also aims to assure that dealers, exchanges, brokers, and give out information, keep users’ funds separate from their own, and meet other rules.
Crypto-focused lawyer Gabriel Shapiro has dampened the celebration by arguing on X that FIT21 would still grant the SEC significant power.
it does not even shift agencies; SEC would still have huge power
it provides for a dual regulatory regime, split between SEC and CFTC
it does this by giving the CFTC authority it never had–regulatory authority over a spot commodities market pic.twitter.com/Iaoy51cWns
— _gabrielShapir0 (@lex_node) May 22, 2024
FIT21 mainly transfers control of crypto to the CFTC, which the industry sees as a more relaxed regulator than its securities-regulating counterpart. Transferring most digital assets to the CFTC’s jurisdiction would classify them as commodities, not securities.
FIT21 unlocks a conversation beyond innovation. It’s about national security, consumer protection & global competitiveness.
It’s about shaping what the future global digital economy looks like and how it functions.
Let’s give Americans the clarity needed to seize this moment. pic.twitter.com/scdatvjyp5
— Tom Emmer (@GOPMajorityWhip) May 22, 2024
SEC and White House in Opposition to FIT21’s Approach
Before the vote on May 22, the White House stated that the FIT21 bill doesn’t adequately protect consumers in certain crypto transactions. However, it decided not to veto the legislation. SEC Chair Gary Gensler also criticized FIT21. He said the bill could create new regulatory gaps and weaken established oversight of investment contracts, risking investors and capital markets.
Meanwhile, Democratic Representative Maxine Waters claimed that the bill would let crypto firms escape responsibility after generating “billions of dollars unlawfully issuing or facilitating the buying and selling of crypto securities.”
Read More: Senate overturns SEC rule, allowing banks to officially custody Bitcoin and crypto
Coinbase CEO Brian Armstrong Supports FIT21
Coinbase CEO Brian Armstrong shared his thoughts on FIT21 on the social media platform X. Armstrong called it a “historic vote,” stating that if passed into law, it would “finally begin to establish clear rules to regulate crypto.”
Historic vote today on the FIT21 bill in the House of Representatives, that will finally start to create some clear rules to regulate crypto (if it becomes law).
Americans want to know their representatives are protecting their rights to use crypto, creating clear rules to…
— Brian Armstrong (@brian_armstrong) May 22, 2024
Spot Bitcoin ETFs Maintain Positive Momentum
On May 23, spot bitcoin ETFs in the U.S. recorded total net inflows of $153.91 million, marking their eighth consecutive day of net inflows. According to data from SoSoValue, BlackRock’s IBIT saw the largest net inflows of $92 million among the 11 ETFs. Fidelity’s spot bitcoin ETF came next with inflows of $75 million. Meanwhile, Ark Invest and 21Shares’ fund attracted $3 million.
Grayscale’s GBTC had net outflows of $16 million. Seven other funds from VanEck, Bitwise, and others experienced zero flows. Since their debut in January, the US-based spot bitcoin ETFs have seen a total net inflow of $13.33 billion.
Disclaimer: Cryptocurrency is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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