[NEWS] The U.S. House of Representatives passes cryptocurrency-related bill "FIT21" as Biden administration shifts policy

On the 22nd, the US House of Representatives approved a bill, recording a 279-136 vote, to clarify regulations on digital assets, including cryptocurrencies. The bill that has been approved is the "The Financial Innovation and Technology for the 21st Century Act (FIT21)."

If the bill is passed by the Senate and signed by President Joe Biden, it will clarify the roles of the SEC (US Securities and Exchange Commission) and CFTC (US Commodity Futures Trading Commission) regarding digital assets. In addition, by promoting the responsible development of digital assets and payment systems, it will strengthen the US's initiative in the global financial sphere.

SEC Chairman Gary Gensler criticized the FIT21 Act, saying it would "weakening current consumer protections." Gensler warned that the proposed bill "would create significant regulatory gaps, undermine decades of precedent in the oversight of investment contracts, and pose significant risks to investors and capital markets."

Gensler further emphasized that the regulation would prevent blockchain-based investment contracts from being classified as securities. He also said that this change would allow issuers of cryptocurrency investment contracts to self-certify their products as decentralized systems, effectively removing them from SEC oversight.

"The SEC has only 60 days to review and challenge the product's certification that it is a digital product. Any successful SEC challenges would be reclassified as limited digital assets and subject to the bill's looser SEC oversight regime, which removes many core protections," he added.

He further argued that the regulation would lead to the abandonment of the Howey test, a method for determining whether a product qualifies as a security, which would weaken protections for investment contracts.

Biden Administration Announces Policy Change

Meanwhile, the Biden administration, which had previously stated that it would exercise its presidential veto on the FIT21 Act, issued a new statement on the 22nd. In this policy statement, it reversed its previous stance, saying it would work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets. The statement came hours after Chairman Gensler expressed his opposition.

Through policy documents, the Biden administration has reversed its previous stance of rejecting cryptocurrency-related bills. However, it also claims that the bill "contains loopholes that could expose investors to multiple risks."

In the statement, it said, "The Administration is eager to work with Congress to build on existing authorities to ensure a comprehensive and balanced regulatory framework for digital assets that will foster the responsible development of digital assets and payment innovation and strengthen U.S. leadership in the global financial system."

The background to the Biden administration's policy shift is the U.S. presidential election in November. Cryptocurrency holders include many voters under the age of 40, and it appears that the administration has decided that it would be disadvantageous to continue with its previous stance.

Reference: White House
Image: Shutterstock

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