Image credit: DRNADIG/National Geographic

Disclaimer: This story was originally published on May 22, 2024.

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The United States House of Representatives has passed legislation to establish clearer cryptocurrency regulations in a watershed moment for the digital asset ecosystem, where most of the chamber voted in favor of the bill.

On May 22, the House approved the Financial Innovation and Technology for the 21st Century Act (FIT21) in a 279-136 vote with strong support from House Democrats. The approval of the crypto market structure bill represents a landmark victory for the crypto industry, signaling a major step forward in its quest for regulatory clarity and mainstream acceptance within the US legislative landscape.

Overall, 71 Democrats and 208 Republicans voted in favor of the bill, versus three Republicans and 133 Democrats who voted against it.

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

The bill, introduced in July 2023, aims to establish “clear and functional” federal requirements over digital assets markets, providing consumer protections and regulatory clarity. 

The legislation now heads to the US Senate. If passed and signed into law, it will also establish the Commodity Futures Trading Commission (CFTC) as the primary regulator of the non-securities spot markets. Additionally, it aims to provide a clearer definition of what constitutes a security or a commodity in the digital asset space. It will also clarify the jurisdiction of the Securities and Exchange Commission (SEC) over the digital asset industry.

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

Representative Maxine Waters, speaking before the floor vote, argued that the FIT21 bill would send crypto assets to a “regulatory no man’s land.” She claimed the bill would allow traditional finance firms to operate without SEC oversight and enable crypto businesses that have been dodging securities laws to avoid responsibility.

“They have already made billions of dollars unlawfully issuing or facilitating the buying and selling of crypto securities,” Waters said. “And Republicans are now proposing to reward these illegal activities by making these activities legal.”

The House is scheduled to debate and vote on the Central Bank Digital Currency (CBDC) Anti-Surveillance State Act. This legislation aims to prevent the Federal Reserve from issuing a digital dollar via intermediaries.