Bipartisan crypto market structure bill awaits House vote on May 22

The US House of Representatives will make significant progress this week on a landmark bill that aims to alter the laws concerning cryptocurrencies. Credible reports indicate that Congress will introduce the Financial Innovation and Technology for the 21st Century Act, or FIT21 Act, on May 22, 2022.

This month, the Rules Committee gave the go-ahead for FIT21 to go to a vote after it had already passed the House Agriculture and Financial Services Committees last summer. This bipartisan legislation has attracted support from both Democrats and Republicans, with 11 co-sponsors, including Henry Cuellar from Texas, Ritchie Torres from New York, and Wiley Nickel from North Carolina. Its aim is to provide much-needed regulatory certainty for digital assets.

Another essential feature of the proposed bill is the establishment of shared regulatory powers between two regulatory bodies—the SEC and the CFTC. Notably, this legislation would give the CFTC the authority to regulate digital commodity markets, such as exchanges and broker-dealers.

The FIT21 Act aims to introduce future clarity for digital assets by stating that the mere existence of an investment contract does not automatically convert a token into a security. This clarification has the potential to influence numerous legal conflicts with the SEC regarding token issuers and crypto exchanges. The fact sheet published with the bill states that about 70% of all crypto tokens are commodities.

The FIT21 Act has been formulated despite encountering opposition from certain members of the House. Most notably, some Democrats have voiced their concerns that the bill may limit the SEC too much. Late last summer, Representative Jonathan Jackson of Illinois said he doubted the bill would make a difference and even suggested an amendment that would exclude a clause that allows firms to avoid many SEC actions by simply filing what is known as a “notice of intent to register.” But his amendment failed.

Jackson stated that the proposal to register the intent of the companies without the final regulations would be unfavorable for investor protection. Instead, he pushed for increased official surveillance of this sector. On the one hand, Glenn Thompson from the Agriculture Committee stood up for the “notice of intent” provision, as it allows the firms to work within a limited framework till they receive registration approval, which may take many months. He also said that the CFTC would still be able to go through and take action against those firms that have undergone this process.

With a Republican majority and the expected backing of a few Democrats, the bill seems destined to pass the House. Its prospects in the Senate, however, appear dim.

This legislative action takes place against the backdrop of other regulatory efforts concerning cryptocurrencies. Within days of the anticipated House vote, the US Senate passed Joint Resolution 109 to repeal SAB 121 issued by the SEC. The resolution is now on its way to the President’s desk as the Biden administration has made it clear that President Biden will veto it.

These legislative and regulatory developments are still ongoing and will continue to influence the multi-faceted nature of cryptocurrency regulation in America.

David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.

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