Crypto Firms Unite in Support of FIT21 Bill Ahead of Crucial House Vote

In a concerted effort, numerous cryptocurrency firms and advocacy groups have urged U.S. lawmakers to back legislation that would delineate the roles of financial regulators concerning digital assets. 

Calls for Crypto Regulatory Clarity

On May 16, approximately 60 companies, represented by the Crypto Council for Innovation (CCI), addressed a letter to the leadership of the U.S. House of Representatives, advocating for the passage of H.R.4763, known as the Financial Innovation and Technology for the 21st Century (FIT21) Act. This bill, which cleared the House Financial Services Committee in July 2023, aims to define the regulatory authority of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over digital assets.

The CCI emphasized that while the FIT21 Act would introduce new compliance challenges for digital asset companies, regulatory clarity is essential for consumer safety and a more responsible market. They highlighted the current predicament where digital asset firms are expected to comply with U.S. securities laws that were established nearly a century ago, long before the advent of modern technology and the speed of internet transactions.

Among the prominent signatories of the letter were Coinbase, Circle, Block, Kraken, Gemini, and Stand With Crypto. The advocacy group also encouraged U.S. voters to reach out to their representatives to support the bill.

Legislative Progress and Political Implications 

Patrick McHenry, the Chair of the House Financial Services Committee, indicated that the FIT21 bill could be ready for a full floor vote later this month, following its consideration by the rules committee. This timeline would allow lawmakers about five days in session before June.

Notably, several lawmakers, including Representative French Hill, have already expressed their intention to vote in favor of the legislation. In a related development, both the House and Senate recently passed a resolution to overturn an SEC rule on how banks should handle digital assets. Despite receiving bipartisan support in Congress, President Joe Biden announced his intention to veto the resolution.

Senator Cynthia Lummis, a prominent advocate for digital assets, noted that the resolution overturning the SEC rule marked the first standalone crypto legislation passed in this session of Congress. However, it remains uncertain whether lawmakers will proceed similarly with the FIT21 Act. The White House has not indicated whether President Biden would promptly sign the bill into law if it passes both the House and Senate.

The potential approval of these two crypto bills comes as the U.S. gears up for an election year. President Biden and former President Donald Trump, the presumptive candidates for the Democratic and Republican Parties in 2024, have scheduled two debates for June 27 and September 10, where cryptocurrency might become a discussion topic. 

International Comparison and Regulatory Advances

Currently, the U.S. trails behind other countries in establishing a regulatory framework for digital assets. Major economies such as the European Union, United Kingdom, Singapore, Japan, South Korea, the UAE, Brazil, and Australia have made significant strides in this area. Without Congressional action to implement effective regulations, American innovators may continue to seek opportunities abroad.

A notable example is the European Union’s Markets in Crypto Assets (MiCA) law, designed to regulate the crypto asset sector. Set to be fully implemented by the end of 2024, MiCA aims to provide greater protection for purchasers in the EU crypto market through a comprehensive framework for crypto asset rules and specific provisions for stablecoins. These measures are expected to create a safer and more regulated crypto trading environment. Despite this, the euro still plays a minor role in the cryptocurrency market post-MiCA announcement.

The European Securities and Markets Authority (ESMA) delivered its latest report on MiCA regulation on March 25, enhancing the EU’s crypto regulatory landscape. ESMA is now entering the third consultation stage, with all proposed rules open to public comment. This step is part of ESMA’s broader strategy to establish a secure and regulated crypto marketplace in the EU. The final draft of the law outlines legislative actions being implemented across Europe.

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