The crypto regulation bill is headed to a cloudy future in the Senate with no companion bill and faces one of the country’s most prominent crypto critics.
A bill clarifying the United States securities and commodities regulator’s roles in policing crypto is headed to an unknown future as it makes its way to the Senate before going to President Joe Biden’s desk.
The Republican Party-led Financial Innovation and Technology for the 21st Century Act (FIT21), or H.R. 4763, passed a vote in the U.S. House of Representatives on May 22 with 71 Democratic Party representatives and 208 Republicans in favour to 136 against.
Its future in the U.S. Senate is unclear, as there is no companion bill, and it faces one of the country’s biggest crypto critics, Senator Elizabeth Warren. On May 16, however, the Senate passed a resolution calling to kill a rule restricting banks and crypto firms from doing business.
It could still be months before the 100-member Senate considers FIT21, as there is no time constraint on when senators must act on it.
Even if they do, the bill would likely be assigned to a committee for possible rounds of reviews, hearings and markups. If it survives that, then a majority of 51 senators must vote in favour for it to pass.
Parts of FIT21 could change, with House and Senate members meeting to iron out any differences in their versions of the bill. The bill will then go back through Congress for final approval.
President Biden will then have 10 days to sign or veto FIT21. However, his administration said on May 22 that it opposed the passage of the bill but didn’t say if he would veto it.
Even if Biden vetoes FIT21, the House and Senate could override him by passing it through both chambers with at least a two-thirds majority vote.
Industry cheers passage
U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler publicly opposed FIT21 on May 22, saying it creates “new regulatory gaps” and risks capital markets stability. Its success in the House of Representatives is seen by many as an early win for crypto.
Coinbase CEO Brian Armstrong described the bill’s passage — along with getting 71 Democrats onside — as “a total victory” and a win for “clear crypto rules.”
“That is a huge number of elected Democrats voting ‘no confidence’ in the current SEC,” said Variant Fund legal chief Jake Chervinsky.
However, crypto-focused lawyer Gabriel Shapiro has thrown cold water on the celebration, arguing on X that FIT21 would still give the SEC “huge power.”
“It provides for a dual regulatory regime, split between SEC and CFTC,” he added. “It does this by giving the CFTC authority it never had — regulatory authority over a spot commodities market.”
FIT21 largely hands control of crypto to the Commodity Futures Trading Commission (CFTC), which the industry sees as a more relaxed regulator than its securities-regulating counterpart.
The SEC, however, would have regulatory power over cryptocurrencies that aren’t sufficiently decentralized, but FIT21 would create a way for cryptocurrencies considered securities to be sold as commodities.
Recent Comments