The U.S. House of Representatives has passed a bill that clarifies how crypto markets should be regulated under the jurisdiction of the securities and commodities regulators.
The FIT21 bill passed the House with 71 Democrats and 208 Republicans in favor, with 136 members of the House voting against it.
The bill will now be reviewed in the Senate before it lands on President Joe Biden’s desk in The White House, but that is unlikely to take place until early next year.
“The SEC and the CFTC are currently in a food fight for control of these asset classes,” said Representative Patrick McHenry before the House vote.
On the other hand, one of the bill’s biggest opposers, Representative Maxine Waters, said the bill would set crypto regulation to “no mans’s land” and claimed the legislation would “deregulate crypto and certain traditional securities” to an extent that she had serious concerns about.
FIT21 would grant more oversight of crypto spot markets to the Commodity Futures Trading Commission (CFTC) under the label of “digital commodities.” Meanwhile, the U.S. Securities and Exchange Commission (SEC) would have oversight over “restricted digital assets.”
Coinbase CEO Brian Armstrong declared the bill’s passing a resounding win for clear crypto rules and a big step forward for sensible regulation of the industry.
“It’s an important step in providing long-awaited regulatory clarity for crypto, protecting U.S. consumers, and promoting American innovation,” said a16z’s
That view was shared by several other market participants, but many other leading industry figures suggested that this wasn’t actually something to be excited about.
“I don’t think FIT121 is actually a win, just shifts agencies from SEC to CFTC, you still have all the same problems of crypto tokens not actually being commodities and not fitting into arcane commodity futures frameworks just like they don’t fit arcane securities frameworks,” said Clusters founder “0xfoobar.”
For those that assume the CFTC has historically been more lenient towards crypto than the SEC, he pointed to an example six months ago when the commodities regulator sued ZeroEx Inc for deploying the 0x protocol and the Matcha decentralized exchange (DEX) aggregator. The CFTC argued that leveraged token offerings should only be offered in compliance with the Commission’s regulations.
Prominent crypto lawyer Gabriel Shapiro also pointed out that handing over authority to a different regulator, in the hopes that they might not be as hostile towards the industry, was potentially not in the best interests of the industry.
“It does not even shift agencies; SEC would still have huge power. It provides for a dual regulatory regime, split between SEC and CFTC,” said Shapiro on X.
“It does this by giving the CFTC authority it never had–regulatory authority over a spot commodities market.”
Another pseudonymous industry watcher, who goes by “@zeroxkeegan” on X, went as far as to say that FIT21 getting shut down in the Senate might be the best case scenario.