The U.S. House of Representatives on May 22 approved legislation led by Republicans that would establish a regulatory framework for digital assets.
The House-approved Financial Innovation and Technology for the 21st Century Act, H.R. 4763, also known as FIT21, which U.S. Rep. Glenn “GT” Thompson (R-PA) sponsored in July 2023 alongside four original cosponsors, including U.S. Reps. French Hill (R-AR), Dusty Johnson (R-SD), and Tom Emmer (R-MN), now heads to the U.S. Senate for consideration.
“Clarity in digital assets is crucial. Today’s bipartisan passage of the Financial Innovation and Technology for the 21st Century Act is a significant milestone,” Rep. Thompson said on Wednesday. “It underscores the House Committees on Agriculture and Financial Services’ efforts to establish a much-needed regulatory framework… [that] is designed to protect consumers and investors while fostering American leadership in the digital asset space.”
If enacted, H.R. 4763 would require the Commodity Futures Trading Commission (CFTC) to regulate a digital asset as a commodity if the blockchain, or digital ledger, on which it runs is functional and decentralized.
Likewise, the Securities and Exchange Commission (SEC) would have to regulate a digital asset as a security if its associated blockchain is functional but not decentralized, according to the congressional record bill summary, which also says that the CFTC and SEC must jointly issue rules to define terms and exempt dually registered exchanges from duplicative rules.
“I applaud the House’s bipartisan passage of FIT21, which crafts a ‘fit for purpose’ regulatory framework for digital assets that protects consumers and investors while securing the United States as a leader in blockchain innovation,” said Rep. Hill. “This legislation passed in a bipartisan manner, signaling that consumer protection and American innovation are priorities for lawmakers on both sides of the aisle.”
Rep. Johnson said that House passage of the bill is necessary to bring stability and clarity to the digital assets ecosystem.
“Without this bill, digital asset innovation will continue to be filled with uncertainty,” said Rep. Johnson. “Today’s victory gets us one step closer to establishing clear rules of the road for developers in the industry so America can remain a global hub for tech and finance innovation.
“I hope the Senate considers this bill soon so we can finalize this essential framework,” he added.
The more than 200-page bill includes provisions to protect consumers by strengthening transparency and accountability with market participants by requiring digital asset developers to provide accurate, relevant disclosures, including information related to a digital asset project’s operation, ownership, and structure.
H.R. 4763 also would require digital asset customer-serving institutions, like exchanges, brokers, and dealers, to provide appropriate disclosures to customers, among other numerous provisions, according to a bill summary provided by the lawmakers.
“This is an important opportunity for the United States to lead. With the passage of the Securities Clarity Act and FIT21, American digital asset innovation can flourish,” Rep. Emmer said. “This globally competitive framework will give entrepreneurs the clarity and assurance they need to build here, in the United States, while ensuring the next iteration of the web emulates our values.”
The measure “is the first legislation of its kind in United States history to pass a chamber of Congress,” added Rep. Hill, “and I remain committed to pushing this legislation forward until it becomes law.”