Will Washington Embrace or Restrict Crypto?

Will Washington Embrace or Restrict Crypto?

EconomyRegulation

By Jakub Lazurek

20 May 2024 (30 days ago)

3 min read

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A crucial vote in Washington on the Fit21 bill could determine whether the US embraces or restricts the booming cryptocurrency industry.

With Bitcoin’s value skyrocketing and Wall Street showing keen interest, the US crypto industry is on edge as a crucial vote in Washington nears. The Financial Innovation and Technology for the 21st Century Act (Fit21) could transform the regulatory landscape for digital assets, either integrating them more fully or hindering their growth.

Fit21 proposes a significant change in how the US handles digital currencies. Currently, oversight is split between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Fit21 would make the CFTC the main regulator for cryptocurrencies, providing clearer rules for the industry. The bill also includes protections for consumers and guidelines for handling assets in bankruptcy.

The crypto industry strongly supports Fit21, seeing it as vital for the future of the US digital asset market. The lack of clear regulations has been a major issue, with some companies threatening to leave the US. The Crypto Council for Innovation warns that the US is falling behind other countries in embracing bitcoin. In a letter to lawmakers, the council stressed that passing Fit21 could accelerate blockchain technology growth and enhance financial inclusion.

Adding to the tension of the upcoming vote, Wall Street giants have recently entered the crypto market. The approval of several Bitcoin exchange-traded funds (ETFs) in January has allowed traditional investors to buy into Bitcoin without directly holding the cryptocurrency. This move has opened the door for Wall Street but raised concerns about innovation being stifled due to high custody fees.

With Bitcoin's value rising and pressure from both the digital asset industry and Wall Street, the vote on Fit21 is critical for US cryptocurrencies. If passed, the bill could provide much-needed regulatory clarity and support industry growth. It would show that the US is ready to support digital assets.

However, if the bill is not passed, the future of crypto in the US remains uncertain. A negative outcome could lead to many crypto companies leaving the US and slow down innovation. As the vote approaches, lawmakers must decide whether to embrace the crypto industry or maintain a more restrictive approach.

In short, the Fit21 vote is a pivotal moment for the US crypto industry. The legislation aims to streamline regulation by making the CFTC the main regulator, protecting consumers, and clarifying asset handling in bankruptcies. The crypto industry's strong support highlights its importance. Wall Street’s recent entry into the market adds complexity, with concerns about potential innovation stifling.

As the vote draws near, its outcome will significantly impact Bitcoin and the broader crypto sector in the US. The country could either become a global leader in digital assets or fall behind in the digital economy. With the vote just days away, all eyes are on Washington to see if it will welcome crypto or keep it at bay.

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