The Republican Financial Innovation and Technology Act for the 21st Century (FIT21) or H.R. 4763 passed the House of Representatives on May 22 with support from 71 Democrats and 208 Republicans, against 136 votes. Its future in the Senate is unclear as there is no accompanying bill and it faces one of the biggest cryptocurrency critics, Elizabeth Warren. Last week, the Senate passed a resolution to repeal a rule limiting banks and cryptocurrency firms from doing business. However, it may take several months for the Senate to consider FIT21 as senators have no time limits on actions regarding this bill.
Even if the Senate considers the bill, it will likely be sent to a committee for possible rounds of reviews, hearings, and revisions. If it survives these stages, then a majority of 51 senators must vote for its adoption. Some parts of FIT21 may change, and members of the House and Senate will meet to reconcile differences in their versions of the bill. Then the bill will pass through the House and Senate again for final approval. President Biden will have ten days to sign or veto it. However, the House and Senate can override a veto by passing the bill again in both chambers with at least a two-thirds majority.
SEC Chairman Gary Gensler publicly opposed FIT21 on May 22, stating that it creates “new regulatory gaps” and risks to capital market stability. The passage of the bill in the House is seen by many as an early victory for cryptocurrency. Coinbase CEO Brian Armstrong called the passage a “complete victory” and a win for “clear rules for cryptocurrency.” “That’s a huge number of elected Democrats voting ‘no confidence’ in the current SEC,” said Variant Fund’s chief legal officer Jake Chervinsky.
However, cryptocurrency-focused attorney Gabriel Shapiro tempered the celebratory mood, arguing that FIT21 still gives the SEC “tremendous power.” “It provides a dual regulatory regime divided between the SEC and CFTC,” he added. FIT21 mainly transfers control over cryptocurrencies to the Commodity Futures Trading Commission (CFTC), which the industry sees as a more lenient regulator than its securities counterpart. However, the SEC will have regulatory authority over cryptocurrencies that are not sufficiently decentralized, but FIT21 will also create a way for cryptocurrencies that it deems securities to be sold as commodities.
