Former Treasury Official Criticizes FIT 21 Ahead of House Vote
The Financial Innovation and Technology for the 21st Century Act (FIT 21) that seeks to legislate the digital assets industry has been criticized by Graham Steele, a former Treasury official as the House of Representatives readies for a vote.
The bill, described as a light-touch regulatory framework for cryptocurrencies, does not address Big Tech, contrary to some claims.
FIT 21 Criticized Ahead of House Vote
The FIT 21 Act has generated a lot of discussion among members of the US House of Representatives and other stakeholders as the House prepares for a crucial vote. Graham Steele, a former Treasury official who is said to be eyeing the FDIC Chair position, criticized the bill’s approach to regulating digital assets.
Steele suggests that the legislation may not effectively address the issues of today’s financial technologies. However, some supporters of the bill have not only misrepresented it as an anti-Big Tech bill but also failed to include any specific provisions within the bill to directly regulate these corporations.
This petition about the FIT 21 Act uses progressive framing, claiming that the bill fights against "Big Tech."
FIT 21 actually creates a light-touch regulatory framework for crypto, largely outside securities laws. (It contains no prohibition on Big Tech.)
Pretty sneaky. pic.twitter.com/jXJLmTr065
— graham steele (@steelewheelz) May 21, 2024
Many digital asset organizations such as Coinbase and Kraken have endorsed the bill as a means of providing a clear legal environment. It aims at establishing what should be considered as digital assets and increasing the powers of the Commodity Futures Trading Commission (CFTC) to cover these assets.
However, some of the senior Democrats such as House Financial Services Committee Ranking Member Maxine Waters and House Agriculture Committee Ranking Member David Scott have opposed the idea. They pointed to the fact that the bill threatens established case laws and may bring a certain level of instability in the traditional securities market.
Concerns Over Investor Protections and Overreach
The criticisms of FIT 21 are not only legal but also concern investor protection and the stability of financial markets. An internal email from the office of the Democrat Whip, leaked to Politico, stressed concern that the safe harbor provisions might allow companies to escape requirement of standard securities law, which might result in fraud and manipulation of the market.
This aspect of the legislation has led the lawmakers to arrange for a briefing with the Securities and Exchange Commission (SEC) to further deliberate on the consequences.
Further, the legislation has been criticized for the possibility of preventing shareholders from taking legal action against publicly traded organizations and for anticipating state legislation regarding digital assets. Such measures could dilute fiduciary standards and erode the fundamentals of capital markets, as per the information provided by the Democrat Whip’s office.
Market Reactions and Political Dynamics
The discussion of FIT21 raises a more extensive political conversation about cryptocurrencies and digital assets in the United States economy. For instance, the CEO of Galaxy Investment Partners, Mike Novogratz, has pointed out that the Democrats’ stance on the bill might be a huge mistake.
.@Novogratz says he's sensing a move toward crypto acceptance from Democrats.
“I’ve been trying to talk sense. I was like, 'Guys, this could be the biggest own-goal of the last six years,’” he says. “There is no reason to make crypto, which is a technology, a political issue." pic.twitter.com/IszhoTs2v9— Squawk Box (@SquawkCNBC) May 21, 2024
He says that regulating cryptocurrencies should not be a partisan political agenda and should not be politicized. These statements are similar to an increasing trend in the industry to push for the adoption of crypto technologies regardless of the political party involved.
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