US House of Reps passes bill aiming to regulate cryptocurrencies

FIT21 bill received massive support as the House of Representatives voted to pass the bill on Wednesday. The White House and US Securities & Exchange Commission (SEC) Chair, Gary Gensler, expressed concerns about the potential impact of the FIT21 bill on investor protections in a statement.

Also read: Crypto community anticipates House vote on FIT21 Act for digital asset regulations

House passes FIT21 bill

The House of Representatives on Wednesday passed the Financial Innovation and Technology for the 21st Century Act (FIT21) with a 279 - 136 vote to help establish a clear regulatory framework for crypto assets.

The bill received bipartisan support with 71 Democrats, including former House Speaker Nancy Pelosi, joining 208 Republicans to vote in favor of the FIT21 bill.

"Today’s vote demonstrates the bipartisan nature of digital assets and reaffirms that FIT 21 can greatly improve upon the status quo by providing much needed regulatory clarity," said the Crypto Council for Innovation.

"FIT21 will cement the United States’ global leadership in technological innovation, invention, and adoption," said House Financial Services Committee Chair Patrick McHenry.

This comes after the Senate joined the House of Representatives in passing a measure to repeal the SAB121 rule from the Securities & Exchange Commission.

SEC Chair Gary Gensler said on Wednesday that the FIT21 poses a perpetual threat to investor protection. His main arguments center on the long-standing investment laws that have guided the American securities market for 90 years and the impact that the bill's passage would have on the crypto industry's jurisdiction.

"The Financial Innovation and Technology for the 21st Century Act ('FIT 21') would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk," said Gensler in a statement.

The FIT21 bill aims to bring most crypto assets that are sufficiently decentralized under the purview of the Commodity Futures Trading Commission (CFTC) rather than the SEC. Many crypto community members have voiced support for the bill, considering the SEC's recent crackdown on several crypto projects.

Read more: US House Committee set to address regulatory issues over digital assets through review of FIT21 Act

"The bill allows issuers of crypto investment contracts to self-certify that their products are a 'decentralized' system," Gensler said, "and then be deemed a special class of 'digital commodities' and thus not subject to SEC oversight"..

FIT21, originally introduced by the House Financial Services and the House Agriculture committees, was created to provide regulatory frameworks to guide the crypto industry.

Last week, about 60 top crypto industry voices who support the bill's passage signed a letter advocating for lawmakers to vote for its passage.

Furthermore, the White House released a notice on Wednesday stating that the administration under President Joe Biden opposes the passing of the H.R.4763 bill containing FIT21 but doesn't threaten to veto it.

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The White House claims that the bill lacks sufficient customer protection. However, they will work with Congress to ensure smooth regulations for cryptocurrencies. 

"The Administration is eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets," the notice states. "H.R.4763 in its current form lacks sufficient protections for consumers and investors who engage in certain digital asset transactions.”