Crypto Industry Backs House Bill Moving Toward Final Vote

The FIT21 legislation, aiming to create a comprehensive U.S. regulatory framework for digital assets, is set for a vote next week. The crypto sector is urging House leaders to support this crucial bill. Many industry representatives have signed a letter to top lawmakers in the U.S. House of Representatives, advocating for the Financial Innovation and Technology for the 21st Century Act.

With the House ready to vote, the letter emphasizes that passing the bill would help the U.S. stay competitive globally. This vote marks a historic moment for the cryptocurrency industry in the U.S., potentially bringing long-awaited regulation. Leading associations and businesses, including Coinbase, Kraken, and Andreessen Horowitz, wrote a letter to Speaker of the House Mike Johnson (R-La.) and Minority Leader Hakeem Jeffries (D-N.Y.), pushing for the bill's approval. The Financial Innovation and Technology for the 21st Century Act (FIT21) is scheduled for a vote next week, with a mid-week decision anticipated.

The bill designates the CFTC as the main regulator for digital assets, defining its responsibilities versus the SEC’s. It aims to establish consumer protections, including rules for the custody of customers' assets and their treatment in bankruptcy, and to implement safeguards against risky behavior.

"Passing this bill can boost blockchain technology and digital assets, promoting financial inclusion and protecting national security," the letter states. "It is crucial for the U.S. to maintain its leadership in financial innovation."

The crypto industry is optimistic in Washington, recently seeing both the House and Senate pass a resolution overturning an SEC crypto accounting policy, though President Joe Biden has vowed to veto it. This move to overturn the SEC's Staff Accounting Bulletin 121 (SAB 121) was a significant win for the industry, gaining support from many Democratic lawmakers who have traditionally been more hesitant than Republicans in backing crypto.

In the recent policy fight, over one in five Senate Democrats sided with the industry, including Majority Leader Chuck Schumer (D-N.Y.), and about one in ten Democrats in the House supported the effort. However, the comprehensive legislation now approaching a House vote is of a much higher magnitude. Key Senate Democrats have yet to show a willingness to match the House's effort. So far, the Senate has only shown interest in a different crypto bill regulating stablecoin issuers, as part of a broader financial legislative package.

Rep. Patrick McHenry (R-N.C.), chairman of the House Financial Services Committee where the bill originated, noted that Democratic support for FIT21 in the House could be crucial in motivating the Senate. When the measure passed his committee, a handful of Democrats supported it despite opposition from senior member Rep. Maxine Waters (D-Calif.).

On its way to the floor, the FIT21 effort included various amendments called for by the House Rules Committee to meet a May 16 deadline.

The crypto industry's support for FIT21 highlights its desire for clear regulation in the U.S. The bill's passage is seen as essential for maintaining the U.S.'s leadership in financial innovation and ensuring the growth and stability of the digital asset market. As the House prepares for the upcoming vote, the outcome will be closely watched by industry stakeholders and policymakers, as it represents a significant step toward establishing comprehensive crypto regulation in the U.S.