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Controversial crypto bill FIT21 passes House

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Controversial crypto bill FIT21 passes House

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The U.S. House of Representatives passed the piece of crypto regulation Financial Innovation and Technology for the 21st Century Act (FIT21) on Wednesday. This marks the first time comprehensive cryptocurrency legislation has been voted on in the full House.

According to data released by the Congress, the Republican-led bill passed with a vote of 279 to 136, garnering support from 71 Democrats including former House Speaker Nancy Pelosi.

FIT21 aims to establish a regulatory framework for digital assets, granting more authority and funding to the Commodity Futures Trading Commission (CFTC) to oversee crypto spot markets and “digital commodities,” with a focus on Bitcoin (BTC). The bill creates a process for secondary market trading of digital commodities initially offered as investment contracts, and includes provisions for stablecoins and anti-money laundering measures.

While the bill is unlikely to be taken up by the Senate this year, it sets the stage for the next Congress in January. House Financial Services Chair Patrick McHenry said:

FIT21 provides the regulatory clarity and robust consumer protections necessary for the digital asset ecosystem to thrive in the United States. The bill also ensures America leads the financial system of the future and remains a hub for technological innovation.

A widely debated bill

However, the bill has faced criticism from some lawmakers and regulators. House Financial Services Committee Ranking Democrat Maxine Waters called FIT21 one of the worst bills she has ever seen, arguing that it would stretch the CFTC’s resources and weaken enforcement. SEC Chair Gary Gensler also criticized the bill, claiming it would create regulatory gaps and discard the Howey Test, a longstanding legal precedent for determining whether an asset qualifies as a security.

Looking ahead, the Senate does not currently have a companion bill for FIT21, and key lawmakers in the Democrat-controlled chamber have either not shown interest or have opposed the legislation in the past. Senators Kirsten Gillibrand and Cynthia Lummis introduced their own comprehensive crypto regulation bill in June 2022, the Responsible Financial Innovation Act, but it has yet to gain traction on Capitol Hill.

Crypto regulation is becoming an increasingly partisan issue, with Republicans showing views significantly more friendly to digital asset proponents. Donald Trump, the Republican Party candidate for president of the United States, told a gathering of supporters that he supports cryptocurrency and his campaign would accept donations of it.

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