The U.S. House of Representatives is on the verge of a vote that may represent the closest the cryptocurrency industry has ever been to achieving regulatory success in the U.S. Leading industry associations and top companies are urging House leaders to support this crucial effort.
Through the Crypto Council for Innovation, a coalition of digital asset organizations and companies—including Coinbase, Kraken, Andreessen Horowitz, the Digital Currency Group, and about 50 others—an open letter was sent to Speaker of the House Mike Johnson (R-La.) and Minority Leader Hakeem Jeffries (D-N.Y.). This letter advocates for the passage of the Financial Innovation and Technology for the 21st Century Act (FIT21), which has been approved for floor time next week, with a potential mid-week vote.
The bill proposes that the Commodity Futures Trading Commission (CFTC) be designated as the primary regulator of digital assets, delineating clear boundaries between the CFTC’s and the Securities and Exchange Commission’s (SEC) responsibilities. It aims to establish consumer protections, including rules around the custody of clients’ assets and their treatment in bankruptcy, and to implement further safeguards against harmful conduct.
“By passing this legislation, we can accelerate the growth of blockchain technology and digital assets, fostering financial inclusion and protecting national security,” states the letter. “It is crucial for the U.S. to maintain its leadership in financial innovation.”
The cryptocurrency industry is experiencing a surge of momentum in Washington, particularly after the House and Senate successfully passed a resolution overturning an SEC crypto accounting policy, despite President Joe Biden’s promise to veto the effort. This move to overturn the SEC’s Staff Accounting Bulletin 121 (SAB 121) was a significant victory for the industry, gaining substantial support from the Democratic Party, which has historically been more hesitant than Republicans in backing crypto initiatives.
In the recent accounting dispute, approximately one in five Senate Democrats supported the industry’s stance, including Majority Leader Chuck Schumer (D-N.Y.), and around one in ten Democrats in the House.
However, the comprehensive legislation now approaching a House vote is of much greater significance. Key Senate Democrats have so far been less prepared to match the House’s initiative. The Senate has shown tentative interest in a different crypto bill regulating stablecoin issuers, potentially as part of a broader financial legislative package.
Rep. Patrick McHenry (R-N.C.), the chairman of the House Financial Services Committee where the bill was introduced, highlighted that Democratic support for FIT21 in the House could be a pivotal factor in influencing the Senate’s actions. When the measure passed his committee, it did so with support from several Democrats, despite opposition from their senior member, Rep. Maxine Waters (D-Calif.).
As the FIT21 effort progresses toward the floor, it has incorporated a range of amendments called for by the House Rules Committee to meet a May 16 deadline.
