FIT21 Bill Presents Solution to US Crypto Exodus Concerns, Opening Doors for a Flourishing Market
Shalini Nagarajan
Last updated: May 24, 2024 04:02 EDT | 3 min read
According to Kyle Bligen, the director of financial policy at the Chamber of Progress, the approval of the Financial Innovation and Technology for the 21st Century Act (FIT21) on Wednesday will bring the US in line with other countries in terms of its regulatory framework for cryptocurrencies. Bligen stated in an interview with Cryptonews on Thursday that if the FIT21 bill is passed by the Senate and becomes law, it will prevent crypto companies from relocating to countries with clearer regulations.
The bill would grant greater freedoms to cryptocurrency operators in the US while also shifting more regulatory responsibility for digital assets to the Commodity Futures Trading Commission (CFTC). It would establish clear guidelines for businesses regulated by the Securities and Exchange Commission (SEC) and the CFTC, and create a registration system for these businesses. This would enable them to legally serve customers interested in buying and selling digital assets. The SEC would oversee digital assets classified as securities, while the CFTC would oversee commodities and derivatives related to digital assets.
Outdated Law Impedes US Crypto Regulation
Bligen emphasized that the US has been relying on the nearly century-old Howey Test from the SEC to regulate a technology that was invented only a few years ago. He argued that the current system is outdated and ill-suited for this technology. “Hopefully this [bill] will establish the US as a regulatory leader that prioritizes strong consumer protections,” he said. “We already have the most liquid and attractive capital markets in the US. There’s no reason why we can’t have the best cryptocurrency markets as well.”
FIT21 Seen as a Means to Retain Crypto Talent
Harry Sudock, the chief strategy officer at Bitcoin miner GRIID, agrees that the bill would position the US competitively in the global crypto landscape. He also believes that FIT21 would incentivize top talent in the crypto industry to come to and remain in the US. “We’ve witnessed numerous businesses either leaving the US or declining to operate here due to regulatory uncertainty,” he said. “FIT21 will help these businesses return to the US, but the bill is just the beginning.”
FIT21 Clears House Hurdle, Senate Approval Awaits
Though FIT21 has successfully cleared the House, its journey to becoming law is not yet complete. It still needs to be approved by the Senate and signed by the President. Whether or not the Senate will give it the green light remains uncertain.
Ronen Cojocaru, the CEO of automated crypto trading platform 8081, highlighted the unique challenges that crypto bills face in the Senate. Some senators may have a good understanding of the technology and may vocally support or oppose the FIT21 Act. However, others may lack a deep understanding of the intricacies of cryptocurrency, leaving them undecided on the merits of the bill.
“Public opinion and upcoming elections influence senators’ decisions, aligning them with their party’s agenda and voter interests,” he said. “Senators can use a filibuster, requiring 60 votes to advance the bill, which is difficult without strong bipartisan support.”
Cojocaru also explained why the US is currently lagging behind other countries in terms of crypto regulation. He pointed to Switzerland, known as “Crypto Valley,” as a prime example. Switzerland’s financial regulator, FINMA, fosters innovation by providing clear guidelines for crypto businesses, making it a global hub for the industry. Singapore has also attracted numerous crypto companies with its well-defined regulations and supportive policies. The Monetary Authority of Singapore (MAS), its central bank, has struck a balance between encouraging innovation and safeguarding consumers. Similarly, Malta, known as the “Blockchain Island,” has become a magnet for crypto businesses due to its comprehensive and crypto-friendly regulations.
CFTC vs. SEC in Crypto Regulation
Meanwhile, James Koutoulas, the founder of Typhon Capital Management, stated that FIT21 needs further improvements, especially for decentralized finance (DeFi). He also highlighted the unprecedented power it grants to the CFTC to regulate crypto as a spot commodity, which falls outside its usual jurisdiction of regulating commodity derivatives.
“But, at least for now, the CFTC is much less hostile towards crypto than the SEC and seems focused on implementing regulatory pathways instead of maliciously attacking market leaders without the statutory authority to do so, like the SEC,” Koutoulas said.
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