House expected to vote on bipartisan crypto market structure bill Wednesday

The Financial Innovation and Technology for the 21st Century Act, known as the FIT21 Act, is expected to head to the floor for a vote in the House in the afternoon on May 22

article-image

Cvandyke/Shutterstock modified by Blockworks

share

The House of Representatives is scheduled to vote on a landmark cryptocurrency market structure bill this week. 

The Financial Innovation and Technology for the 21st Century Act, known as the FIT21 Act, is expected to head to the floor for a vote in the House on May 22, according to a person familiar with the matter. 

FIT21 advanced through the House Agriculture and Financial Services Committees last summer before getting the greenlight from the Rules Committee to advance to a vote earlier this month. The bipartisan legislation has 11 co-sponsors, including Democrats Henry Cuellar of Texas, Wiley Nickel of North Carolina and Ritchie Torres of New York. 

The proposed market structure law establishes joint rulemaking powers between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Notably, the bill grants the latter control over digital commodities markets, including exchanges and broker-dealers. 

The legislation also clarifies how digital assets are classified, stating that the existence of an investment contract alone does not make a token a security, a distinction that could impact several pending legal disputes between token issuers and crypto exchanges and the SEC. 

About 70% of all crypto tokens should be classified as commodities rather than securities, the co-sponsors wrote in a fact sheet published alongside the bill. 

While FIT21 managed to survive markup, there has been pushback from some House Democrats, who argue the legislation goes too far to limit SEC power. 

Rep. Jonathan Jackson, D-Ill., last summer proposed an amendment — which never passed — to strike a section of the bill that allows firms who have filed a “notice of intent to register” to be exempt from certain enforcement actions from the SEC. 

“Allowing for ‘intent to register’ before those regulations are completed would be an absolute injustice to our constituents and retail investors,” Jackson said. “This industry needs to be under full-force regulation and oversight.” 

Agriculture Committee Chair Glenn Thompson, R-Penn., countered that the “notice of intent” allows firms who meet requirements for treatment of customer funds, disclosures and records to operate limitedly while the potentially years-long registration approval process plays out. The bill also allows the Commodity and Futures Trading Commission to issue enforcement actions against firms who have completed the “notice of intent” process. 

The Republican majority in the House however, coupled with the expected support of at least some Democrats, mean the bill is likely to pass and make it to the Senate, where its fate is less clear. 

The expected House vote comes days after the US Senate passed another crypto-focused piece of legislation Thursday: Joint Resolution 109, which seeks to invalidate the SEC’s Staff Accounting Bulletin (SAB) 121. 

The resolution now heads to the President’s desk. The Biden Administration said earlier this month the President will veto the legislation.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Polygon Call Template (2).png

Research

A significant portion of the call was dedicated to discussing the proposed ZK-PoS Phase 1, which aims to connect Polygon PoS to the AggLayer using a ZK proof of consensus, in addition to a pessimistic proof. This upgrade is intended to generalize how chains settle while protecting chain health and asset integrity. The implementation will involve deploying new contracts for the LxLy unified bridge for token mapping and migrating existing tokens from the PoS portal to the new deployment.

article-image

It may be counterintuitive that a high amount of focus on a technology would lead to security risks — but it’s true

article-image

Structured products are common in traditional finance, but onchain options are scant

article-image

Plus, an update on the ether ETF front and an overview of this week’s economic calendar

article-image

Plus, Solana fell roughly 12% on the week, and for some memecoins the drawdown was even more aggressive

article-image

Mark Wong is currently seeing some profit-taking from early bitcoin adopters, but he also sees buying interest from institutions

article-image

Bitcoin has been in a bull market for 19 months. If March wasn’t the top, that is.