- Crypto Regulation bill, FIT Act, gets HFSC approval.
- CFTC and SEC to work in unison.
The crypto industry rejoiced as the crypto regulation framework bill was approved by the House Financial Services Committee, clearing obscurity. This development in the direction of digital asset regulations is considered a big win for the industry. Experts hope that this will bring clarity to the rules for digital assets.
Crypto Regulatory Bill Gets House Approval in the U.S.
On July 26, 2023, the House Financial Services Committee (HFSC) gladly approved the much-awaited Financial Innovation & Technology for the 21st Century Act or FIT Act. Additionally, the Blockchain Regulatory Certainty Act received a nod from the committee. The digital asset industry has welcomed this development.
This new regulatory approach for digital assets grants significant oversight power to the Commodity Futures Trading Commission (CFTC). After the House approval, the legislation would undergo a potential floor vote of the entire house. It should be noted that the Financial Innovation and Technology for the 21st Century Act was passed with a vote of 35 against 15.
Industry experts advised the participants to keep their horses in check, as the bill will face resistance before becoming law. Many Democrat-led states might not go easy on the approval of the legislation. The whole parliamentary procedure will take its due course of time.
Even though it’s premature, Democrats are already criticizing the decision to allow the CFTC to police crypto while keeping the Securities and Exchange Commission (SEC) on the sideline. It should be noted that the bill requires both the regulating agency to engage in joint rulemaking while the exploration of non-fungible tokens (NFTs) and decentralized finance (DeFi) is underway.
Possible Implications of the Proposed Bill
Senators who worked on the bill are happy with the approval and consider it a massive win for the digital asset industry. Rep. Ritchie Torres, in a Tweet, criticized the regulatory actions taken against the industry. Deeming them to have failed the retail customers, quoting Einstein, he said, “If we do the same thing over and over again and expect a different result, that is the definition of insanity.”
Congressman Tom Emmer said the bill’s passing is a huge win for the United States, bringing the country closer to allowing its citizens to participate in the peer-to-peer digital economy. At the same time, HFSC Chair, Patrick McHenry, says that the legislation would keep the U.S. from falling behind in the race for crypto regulation.
How the Legislation Regulates Crypto
The bill provides an exciting premise where regulators cannot impose any restrictions on private individuals over crypto ownership. Also, the digital asset initiative is kept clear from the foundation of the registration requirements for securities offerings. Crypto issuers will have a limit of $75 Million per year for issuance.
Token sales to unaccredited investors will be banned, and the authorities must register and certify the project. These bodies would determine the ‘sufficiently decentralized’ status and classify securities and commodities. Issuers will also have to share annual and timely reports of the project with the SEC.
Moreover, a single buyer can buy only 10% of the token. Exchanges and companies must keep the customer’s money separate from their own, as this was one of the main issues with FTX-saga. The issuer must have a solid business module and have to register with the authority.
FIT Act has a lengthy parliamentary procedure to go through to become a law. It is still a welcoming step, as the previous actions from the authorities tainted the reputation of the country.
