The Financial Innovation and Technology for the 21st Century Act’s (FIT21) approval on Wednesday would align the US with other nations in terms of its regulatory framework for crypto, according to Kyle Bligen, director of financial policy at the Chamber of Progress.
Bligen told Cryptonews in an interview Thursday that if the FIT21 bill passes the Senate and becomes law, it would stop crypto companies from leaving the US for countries with clearer regulations.
The legislation would provide increased freedoms to cryptocurrency operators in the US. Additionally, it would shift more regulatory responsibility for digital assets to the Commodity Futures Trading Commission (CFTC).
It would also make it clear which businesses the SEC and CFTC regulate and would create a system for registering these businesses. This would allow them to legally serve customers who want to buy and sell digital assets. The SEC would oversee digital assets that are considered securities, while the CFTC would oversee things like commodities and derivatives related to digital assets.
Outdated Law Hinders US Crypto Regulation
Bligen pointed out the fact that the US has been using a nearly century-old law, the Howey Test, from the SEC to regulate cryptocurrency that was invented just a few years ago. He argued that the current system is outdated and doesn’t work for this technology.
“Hopefully this [bill] establishes the US as a regulatory leader that wants strong consumer protections,” he said. “We already have the most liquid, most attractive capital markets in the US. There’s no reason why we can’t have the best cryptocurrency markets as well.”
FIT21 Seen as Crypto Talent Retainer
Harry Sudock, chief strategy officer at Bitcoin miner GRIID, agrees that the bill would propel the US to a competitive position in the international crypto scene. Additionally, he believes FIT21 would incentivize the brightest minds in crypto to come to and stay in the US.
“We’ve seen a number of businesses either leave the US or decline to do business here thanks to regulatory uncertainty,” he said. “FIT21 will help those businesses return to the US, but the bill is really only just the start.”
FIT21’s House Hurdle Cleared, Senate Showdown Looms
FIT21’s journey to becoming law isn’t over yet. While it successfully cleared the House, it still faces an uphill battle. The bill needs to be approved by the Senate and then signed by the President before it becomes law. Whether the Senate will give it the green light remains to be seen.
Ronen Cojocaru, CEO of automated crypto trading platform 8081, highlighted the unique challenges crypto bills face in the Senate. Some senators are familiar with the technology and may be vocal supporters or opponents of the FIT21 Act. However, others might lack a deep understanding of the intricacies of cryptocurrency, making them undecided on the bill’s merits.
“Public opinion and upcoming elections influence Senators’ decisions, aligning them with their party’s agenda and voter interests,” he said. “Senators can use a filibuster, requiring 60 votes to advance the bill, which is tough without strong bipartisan support.”
Cojocaru also explained why the US is currently lagging behind other countries. He pointed to Switzerland, nicknamed “Crypto Valley,” as a prime example. Switzerland’s financial regulator, FINMA, fosters innovation by providing clear guidelines for crypto businesses, making it a global hub for the industry.
Singapore has also attracted many crypto companies with its well-defined regulations and supportive policies. Its central bank, the Monetary Authority of Singapore (MAS), has struck a balance between encouraging innovation and safeguarding consumers. Similarly, Malta, known as the “Blockchain Island,” has become a magnet for crypto businesses with its comprehensive and crypto-friendly regulations.
CFTC vs. SEC in Regulating Crypto
Meanwhile, James Koutoulas founder at Typhon Capital Management, said FIT21 needs some work, especially for DeFi. Additionally, he highlighted the unprecedented power it gives the CFTC to regulate crypto as a spot commodity, which falls outside its usual domain of regulating commodity derivatives.
“But, at least at the present time, the CFTC is infinitely less hostile to crypto than the SEC and seems focused on implementing regulatory pathways instead of maliciously attacking market leaders without the statutory authority to do so like the SEC,” Koutoulas said.
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