23 May

A bill known as the Financial Innovation and Technology for the 21st Century Act (FIT21), spearheaded by Republicans, has cleared the House and is on its way to the Senate for further consideration before potentially reaching President Joe Biden's desk.

The House passed FIT21 with 71 Democrats and 208 Republicans in favor, while 136 Democrats opposed it. However, its fate in the Senate is uncertain, especially given opposition from prominent crypto critic Elizabeth Warren. 

Despite this, the Senate recently voted on a resolution advocating against a rule that restricts banks and crypto firms from conducting business.

The timeline for FIT21 in the Senate is unclear, and there's no deadline for action. If taken up, the bill would likely undergo scrutiny in committees, including reviews, hearings, and revisions. Any differences between the House and Senate versions would need to be reconciled before final approval.

Although President Biden's administration expressed opposition to FIT21, it hasn't explicitly stated a veto intention. Should Biden veto the bill, Congress could override him with a two-thirds majority vote in both chambers.

Overall, the fate of FIT21 remains uncertain, pending Senate action and potential further revisions before it reaches the President's desk.

Sector applauds approval

In a public statement on May 22, SEC Chair Gary Gensler criticized FIT21, claiming that it would create "new regulatory gaps" and jeopardize the stability of the capital markets. Many people saw it as an early victory for cryptocurrency since it passed the House.

A great success for "clear crypto rules" was declared by Coinbase CEO Brian Armstrong upon the bill's passing, which also garnered support from 71 Democrats.

Variant Fund legal chairman Jake Chervinsky stated, "That is a huge number of elected Democrats voting 'no confidence' in the current SEC."

The SEC would still have "huge power" under FIT21, according to lawyer Gabriel Shapiro, who focuses on cryptocurrency, who put an end to the festivities on X.

The bill, FIT21, introduces a dual regulatory framework, dividing oversight between the SEC and the CFTC. This involves granting the CFTC new regulatory authority over spot commodities markets, a power it didn't previously possess.

FIT21 predominantly entrusts the regulation of cryptocurrencies to the Commodity Futures Trading Commission, which is perceived by the industry as a more lenient regulator compared to the SEC, responsible for securities regulation.

Under FIT21, the SEC would retain regulatory jurisdiction over cryptocurrencies that lack adequate decentralization. However, the bill also establishes a mechanism for cryptocurrencies categorized as securities by the SEC to be traded as commodities.

May 2024, Cryptoniteuae

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