With the value of Bitcoin surging and Wall Street circling like a hawk, the U.S. cryptocurrency industry is holding its breath as a crucial vote approaches in Washington next week. The 21st Century Financial Innovation and Technology Act (Fit21) could reshape the regulatory landscape for digital assets, potentially either accommodating the industry or putting the brakes on its recent rapid growth.
Fit21: Lifeline or leash?
Fit21 proposes major changes to the way the U.S. government handles digital currencies. The current regulatory environment is fragmented, with both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) having a say.
Fit21 will establish the CFTC as the primary regulator for cryptocurrencies, giving the industry a clearer picture of the rules it must follow. The bill would also establish guardrails to protect consumers from risky behavior and establish protocols for how these assets are held and handled in bankruptcy proceedings.
The Bitcoin industry supports Fit21, calling it “critical” to the future of the U.S. digital asset market. The lack of clear regulation has been a major obstacle for the industry, with some companies even threatening to abandon the United States altogether.
The Crypto Council for Innovation is concerned that the United States is lagging behind other countries in embracing Bitcoin innovation. In an open letter to lawmakers, he argued:
“By passing this bill, we can accelerate the growth of blockchain technology and digital assets, promote financial inclusion, and protect national security.”
Wall Street enters the cryptocurrency fray
Adding another layer of intrigue to the upcoming vote is the recent entry of Wall Street giants into the cryptocurrency space. The approval of a wave of Bitcoin exchange-traded funds (ETFs) in January opened the door for Wall Street to get a slice of the cryptocurrency pie.
These ETFs allow traditional investors to invest in Bitcoin without having to purchase and hold the cryptocurrency directly. The potential for high fees associated with the custody of these ETFs has some industry observers concerned that Wall Street’s involvement could stifle innovation.
Will Bitcoin Find a Home in the United States?
With the price of Bitcoin rising and pressure mounting from both the digital asset industry and Wall Street, the upcoming Fit21 vote could be a watershed moment for U.S. cryptocurrencies. If passed, this bill could usher in a new era of regulatory clarity and spur growth in the industry.
However, if the bill is defeated, the future of cryptocurrency in the United States remains uncertain, potentially leading to an exodus of cryptocurrency companies and hindering innovation. With 10 days left until the vote, all eyes are on Washington as lawmakers decide whether to welcome cryptocurrencies with open arms or block them.
Featured image by Getty Images, chart by TradingView