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Legislation Providing Clarity for the Crypto Industry
House Financial Services Committee Chairman Patrick McHenry has announced that a new legislation called the Financial Innovation and Technology for the 21st Century (FIT21) Act is on track for a potential House floor vote by the end of May. This legislation is aimed at offering clear regulatory frameworks for digital assets, addressing long-standing issues related to market oversight and consumer protection.
The Need for Regulatory Clarity
McHenry emphasized the importance of the FIT21 Act, stating that the U.S. digital asset ecosystem has suffered from regulatory uncertainty for too long, hindering innovation and leaving consumers vulnerable. The proposed legislation seeks to provide the much-needed clarity that will enable the industry to thrive while ensuring the protection of consumers.
According to Crypto Council CEO Sheila Warren, the consideration process for the FIT21 Act is scheduled to take place during the week of May 20. The House Committee on Rules, consisting of nine Republicans and four Democrats, is expected to review the legislation under a “structured rule,” which will determine the scope of amendments to be considered and the time allocated for debate on each side.
The committee will ultimately decide whether the FIT21 Act should proceed to a floor vote by the end of May. If approved by the House, the bill will then need to navigate through the Senate before reaching the President for final approval.
Regulatory Jurisdiction and Clarity
One of the key aspects of the FIT21 Act is the delineation of regulatory jurisdiction between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). The legislation assigns the CFTC authority over crypto commodities, while the SEC will oversee crypto offerings within investment contracts.
By establishing clear boundaries between the SEC and CFTC, the FIT21 Act aims to address the ambiguity that has surrounded regulatory enforcement in the crypto space. This distinction will provide developers with a clear understanding of the regulatory framework governing their activities, streamlining the fundraising process.
Moreover, the bill introduces a mechanism to enable the secondary market trading of crypto commodities that were initially offered through investment contracts. It also imposes requirements on companies to register with the SEC and CFTC, outlining obligations related to customer disclosure, asset protection, and operational practices.
The FIT21 Act was introduced in July 2023 by House Committee on Agriculture Chairman Glenn Thompson, Whip Tom Emmer, and Representatives French Hill, Dusty Johnson, and Warren Davidson. The upcoming House floor vote on the legislation signifies a significant step towards providing much-needed clarity and regulatory guidance to the crypto industry.
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