The United States House of Representatives has approved the Financial Innovation and Technology for the 21st Century Act (FIT21) with a significant majority vote of 279-136. This vote marks a major milestone for the crypto industry, as the bill could significantly alter the US regulatory landscape for digital assets. The approval saw substantial bipartisan support, particularly from Democrats.
Out of the 208 Republican House members, almost all voted in favor of the bill, while 71 Democrats also supported it. Only three Republicans opposed FIT21. The bill’s bipartisan backing indicates a shift in attitude towards crypto on Capitol Hill. Recently, the House and Senate passed a measure to roll back crypto custody rules for banks, a move that received support from key lawmakers, including Senate Majority Leader Chuck Schumer (D-NY).
This marks the first time a major crypto-related bill has cleared Congress, and it now heads to the US Senate. However, the outcome in the Senate remains uncertain as there is no counterpart bill, and support levels are unclear. Despite this legislative win, the US has been lagging in establishing comprehensive crypto regulations.
The FIT21 bill proposes a federal framework for regulating digital assets, delineating jurisdiction between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). This framework allows issuers to self-certify assets as commodities and curtails the SEC’s regulatory authority, granting the CFTC exclusive control over digital asset commodities. Criteria for determining a project’s status include its level of decentralization, token supply, ownership, and the blockchain’s susceptibility to single-party influence.
House Financial Services Committee (HSFC) Chairman Patrick McHenry (R-SC), a co-sponsor of the bill, emphasized the need for clarity, stating, “The SEC and the CFTC are currently in a food fight for control of this asset class. They’ve created an impossible situation where the same firms are subject to competing and contradictory enforcement actions by the two different agencies, leaving consumers and innovators behind. FIT21 fixes this.”
SEC Chair Gary Gensler has expressed strong opposition to the bill, arguing that it would remove investment contracts from the statutory definition of a security. Gensler maintains that many tokens resemble securities because investors expect profits from the efforts of others. He stated, “The bill implies what courts have repeatedly ruled—but what crypto market participants have attempted to deny—that many crypto assets are being offered and sold as securities under existing law.”
President Joe Biden is also against FIT21, previously stating that he would veto any bill that removes SEC rules on crypto custody for banks. While the related bill has passed both the House and the Senate, Biden has not yet vetoed it. Biden has emphasized the need for sufficient investor protections and called for a comprehensive regulatory framework.
Several Democrats have criticized the bill, with Rep. Maxine Waters noting that it provides major exemptions from critical securities laws. Waters stated that the bill would allow crypto companies to operate without adequate regulatory oversight. Rep. Brad Sherman (D-CA) warned that changes to the definition of a security could threaten the financial markets, describing it as a “dagger at the hundred trillion dollar markets that power our economy.”