The US Capitol in Washington, DC, US, on Thursday, May 16, 2024.
(Full disclosure: I’m helping build Coinbits.app, a bitcoin banking platform.)
Yesterday, the House of Representatives voted to pass the Financial Innovation and Technology for the 21st Century Act (FIT21) yesterday, and the political and regulatory landscape around cryptocurrency is bracing for a seismic shift.
FIT21 is designed to establish a clear regulatory framework for the cryptocurrency market in the U.S. It delineates when the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC) has jurisdiction, introduces consumer protections around self custody, and prohibits federal agencies from preventing the use of cryptocurrencies. Notably, it asks the Treasury to study stablecoins and attempts to define decentralized systems, providing a pathway for assets to be certified as sufficiently decentralized and thus labeled as commodities.
This bill represents a critical step forward in normalizing the use of digital assets in the U.S. By classifying certain digital assets as commodities and others as securities, FIT21 could significantly alleviate the regulatory ambiguities that have clouded the industry’s growth.
The SEC’s role in reviewing and responding to applications within 90 days, determining the decentralized nature of assets, marks a potentially transformative process for the industry. It a word, Gary Gensler’s and Elizabeth Warren’s “Anti-Crypto Army” has been defanged.
The fact that the bill was passed with bipartisan support indicates shifting attitudes toward digital assets in Washington. Until recently, Republicans, and some dissident Democrats, have incorporated pro-crypto messaging into their platforms and positioning themselves as proponents of financial innovation. However, yesterday’s bipartisan vote signifies a growing recognition of the political and economic significance of the crypto voter bloc.
FIT21 will not become law right away, given that there is no corresponding bill in the U.S. Senate. However, when combined with the recent overturning of SAB 121 and the emergence of cryptocurrency as a presidential campaign issue, it signals a broader strategic pivot. Going forward, digital assets will be recognized as a significant electoral lever that could influence election outcomes.
The outcome of the FIT21 vote and the evolving political discourse around cryptocurrency regulation are likely to have profound implications for the economy in 2024 and beyond. As the Senate looks to appoint new commissioners at major regulatory agencies in 2025, the influence of crypto-friendly policymakers could shape the future regulatory environment, making it more conducive to innovation and growth in the crypto sector.
Yesterday’s vote is a positive sign for the potential for digital assets to flourish in the U.S., giving voters hope that America may not relinquish its role as a leader in global finance any time soon.
