The White House is opposing passage of the 21st Century Financial Innovation and Technology Act, also known as FIT21 or HR4763.
“The administration opposes the passage of HR 4763, which would impact the digital asset regulatory structure in the United States,” according to a statement Wednesday. “The Administration will work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets and build on existing authorities to promote responsible development of digital assets and payments innovation and strengthen America’s leadership in the global financial system.” It will be helpful.”
The White House said the bill currently lacks “sufficient protections for consumers and investors engaging in certain digital asset transactions.” He added that more time would be needed to work with Congress on digital asset legislation.
These comments come as the U.S. House of Representatives prepares to vote on FIT21 later today.
FIT21 will provide more powers and funding to oversee cryptocurrency spot markets and “digital goods,” particularly Bitcoin. The bill also creates a process to allow secondary market trading of digital goods “initially offered as part of an investment contract.”
Although it is unlikely that FIT21 will be brought up in the Senate this year, the bill could set the stage for the next Congress in January.
FIT21 controversy
Rep. Maxine Waters, D-Calif., of the House Financial Services Committee, told the House Rules Committee on Tuesday that FIT21 was one of the worst bills she had ever seen. FIT21 would expand the CFTC’s resources and weaken the CFTC’s industry enforcement, Waters said. According to its website, the SEC has 4,500 employees. The CFTC has close to 700 employees, according to fiscal year 2024 budget documents.
“I’m going to tell you a secret the big cryptos don’t want you to know, even under this bill,” Waters said. “The CFTC does not gain sufficient authority to regulate cryptocurrencies in this bill.”
SEC Chairman Gary Gensler also criticized FIT21, saying it would create new gaps in regulation and repeal the Howey test, a 1946 U.S. Supreme Court case frequently cited by the SEC in cryptocurrency-related cases. Investment contracts and therefore security.
“The cryptocurrency industry’s record of failures, fraud, and bankruptcies is not because there are no rules or the rules are unclear. It’s because many players in the cryptocurrency industry don’t follow the rules,” Gensler said. “We must make policy choices that protect the investing public rather than promoting the business models of non-compliant companies.”
There is no companion bill to FIT21 in the Senate, and senior members of the Democratic-controlled Senate have not shown interest in or opposed the bill in the past.
Investment bank TD Cowen said earlier this month that the bill was “unlikely to become law this Congress,” but noted that it could shed light on how Democrats and Republicans view important issues such as anti-money laundering and investor protection.
Biden vs Trump on Cryptocurrency
Rumors emerged earlier this week that the Biden administration may be starting to pay more attention to cryptocurrencies due to their potential to influence how Americans vote in the upcoming presidential election.
A Bloomberg ETF analyst hinted at the political implications of the Securities and Exchange Commission’s ruling rejecting the application for a spot Ethereum exchange-traded fund that could have a negative impact on the Biden administration ahead of the election.
Donald Trump, the presumptive Republican presidential candidate, recently made a move that appears to support cryptocurrency. On Tuesday, Trump announced that he would accept campaign donations in the form of cryptocurrency.
Alexander Grieve, who covers government affairs at venture capital firm Paradigm, called the White House’s comments “a huge course correction” in a post to “What happened between then and now? Trump supported crypto, Democratic allies called out the White House, and 700,000 cryptocurrency voters made their voices heard,” Grieve added.
Paradigm is a supporter of Stand With Crypto, a non-profit organization that advocates for cryptocurrencies and mobilizes voters interested in digital assets.
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