U.S. House approves landmark crypto market-structure bill with strong bipartisan support

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23rd May 2024 – (Washington) The U.S. House of Representatives voted 279-136 in favour of the Financial Innovation and Technology for the 21st Century Act (FIT21), a comprehensive bill aimed at establishing regulations for digital asset markets. The passage of this bill marks the most significant legislative achievement for the industry in Congress to date, with House Democrats making a strong showing by crossing party lines to support the measure.

FIT21, which has now cleared one of the chambers of Congress, represents a crucial milestone for the crypto sector. However, its future remains uncertain as it heads to the U.S. Senate, where no counterpart bill currently exists. The level of support for crypto regulation in the Senate and the progress made by relevant committees on the matter are yet to be determined.

The United States has lagged behind other global jurisdictions in implementing comprehensive crypto regulations, and despite this recent win, the process of establishing effective oversight is far from complete. Representative Josh Gottheimer (D-N.J.), one of the Democrats who defied opposition from the White House and Representative Maxine Waters (D-Calif.), expressed his support for the bill, describing it as “well-reasoned, thoughtful, bipartisan legislation” that deserves to become law through collaborative efforts.

Out of the 279 votes in favour, 71 came from Democrats and 208 from Republicans, while 3 Republicans and 133 Democrats voted against the bill. President Joe Biden expressed his opposition to the legislation in a policy statement, although he did not indicate that he would veto it, as he had previously done when Congress attempted to overturn a Securities and Exchange Commission (SEC) ruling on crypto accounting standards. SEC Chair Gary Gensler also voiced strong opposition to the bill, asserting that it was unnecessary and posed risks to existing securities regulations.

Primarily driven by House Republicans, the bill seeks to establish a regulatory framework for U.S. crypto markets. It aims to provide consumer protections, designate the Commodity Futures Trading Commission (CFTC) as a leading regulator for digital assets and non-securities spot markets, and offer clearer definitions distinguishing between crypto tokens classified as securities or commodities.

Representative Waters argued against the bill, stating that it would allow crypto businesses that have evaded securities laws to shirk their responsibilities. She criticised the proposed legislation, claiming that it would legalise activities that have already generated billions of dollars unlawfully through the issuance and facilitation of crypto securities.

Before the vote, the House engaged in deliberations over several amendments, including those put forth by Representatives Greg Casar (D-Texas), Brittany Pettersen (D-Co.), Ralph Norman (R-S.C.), and Scott Perry (R-Pa.). While Casar’s amendment to adjust a crowdfunding exemption was defeated, the remaining amendments were adopted.