What’s Next for Crypto Regulation After FIT21 Passes in the House?

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The U.S. House of Representatives made history on Wednesday by passing the Financial Innovation and Technology for the 21st Century Act (FIT21) with a vote of 279 to 136.  The Republicans led this landmark bill, representing the first comprehensive legislation to regulate the crypto market. Speaker Nancy Pelosi and 71 other Democrats supported the bill. In addition, the importance of the bill was highlighted by Pelosi, who claimed it as a foundation for responsible innovation. She also underlined the need for further improvements to protect the consumers and investors.

FIT21 seeks to enhance the role of the Commodity Trading Commission in overseeing the crypto markets, especially the ones that include digital assets like Bitcoin. Also, measures for facilitating secondary market trading is introduced by it, which contains provisions on stablecoins and anti-money laundering. Although the FIT21 bill has passed in the House, it has an uncertain future in the Senate, which may not be taken up this year. However, proponents hope it will influence the next agenda of Congress in January.

Read also: U.S. Biden Administration Seeks Revisions to FIT 21 Bill for Better Consumer Protection, Says It Won’t Veto

Patrick McHenry, the Chair of the House of Financial Services, who plans to retire in January 2025, emphasized his wish to advance the bill despite his impending retirement. Moreover, McHenry’s push reflects recognition of growing bipartisan support for regulatory clarity in the crypto industry.

Meanwhile, Ron Hammond from the Blockchain Association mentioned a significant shift in Congress’s take on crypto, signaling a potential easing of the current regulatory barriers. On the other hand, although the White House has opposed FIT21, it continues to welcome collaboration with Congress on a regulatory framework.

Not all lawmakers support FIT21. Ranking Democrat Maxine Waters criticized the bill, claiming that it inadequately empowers the CFTC and might weaken the agency’s enforcement capabilities. Additionally, SEC Chair Gary Gensler voiced concerns.

He highlighted how FIT21 could undermine the current regulatory standards and might fail to protect investors from industrial malpractice. Irrespective of these criticisms, the FIT21 bill passed in the House is crucial in the ongoing debate over crypto regulations in the United States.

The legislative journey of FIT21 appears somewhat challenging, considering it has no companion bill in the Senate and significant opposition from key Senate Democrats. Investment analysts also predict this bill has little chance of becoming law in Congress.

However, they acknowledge its crucial role in highlighting major regulatory issues; lawmakers like Senators Kirsten Gillibrand and Cynthia Lummis are still pushing for comprehensive crypto regulation, though their efforts are separate from FIT21. Therefore, with the persisting discussions around stablecoins and market structure, the future of crypto regulation will likely continue to witness debate and negotiation. 

Also, check out FIT21 Bill’s Senate Journey: What It Means for XRP’s Decentralized Status