Visa Embedded Lending June 2024 Banner

Cryptocurrency Bill Passes US House Despite SEC Opposition

A bill said to provide consumer protections and regulatory certainty around digital assets was passed by the U.S. House of Representatives on Wednesday (May 22).

The Financial Innovation and Technology for the 21st Century (FIT21) Act (H.R. 4763) was approved with broad, bipartisan support, the House Financial Services Committee (HFSC) said in a Wednesday press release.

The bill passed by a vote of 279 to 136, with 208 Republicans and 71 Democrats voting to approve it, according to the website of the Clerk of the House.

“FIT21 provides the regulatory clarity and robust consumer protections necessary for the digital asset ecosystem to thrive in the United States,” HFSC Chairman Patrick McHenry said in the release. “The bill also ensures America leads the financial system of the future and remains a hub for technological innovation.”

The legislation provides the Commodity Futures Trading Commission (CFTC) with new jurisdiction over digital commodities, clarifies the Securities and Exchange Commission’s (SEC) jurisdiction over digital assets offered as part of an investment contract, establishes a process to permit the secondary market trading of certain digital commodities, and imposes consumer protection requirements on entities registered with the CFTC and/or the SEC, according to the release.

These components of the legislation will protect consumers by imposing transparency and accountability rules on digital asset developers and digital asset customer-serving institutions, protect digital asset projects by providing a pathway to raise funds and clarifying which digital asset transactions are subject to which agency’s jurisdiction, and protect digital asset customer-serving institutions by clarifying jurisdiction and creating registration regimes allowing them to serve customers in these markets, per the release.

“The overwhelming support for FIT21 in the House should serve as a wakeup call to the Senate and this administration,” McHenry said in the release. “They must come to the table to ensure the Americans who engage with digital assets can do so safely.”

This landmark legislation could give the cryptocurrency industry the regulatory clarity it has long been seeking from Washington, PYMNTS reported in July when the bill was introduced.

Hours before the vote was held, the head of the SEC said the cryptocurrency legislation would undermine his agency’s work.

In a statement released Wednesday, SEC Chair Gary Gensler said FIT21 “would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk.”

Cryptocurrency exchange Coinbase applauded the passage of the legislation.

“This Act will protect consumers and foster innovation & job creation by providing clear rules for crypto,” Coinbase said in a Wednesday post on X. “And while this is just step 1 in turning the Act into law, let’s celebrate this historic win.”