Wednesday, the House of Representatives passed landmark crypto legislation with strong support from both parties. This could mean a big change in how Washington feels about the digital-asset sector.
The Financial Innovation and Technology for the 21st Century Act was passed by a vote of 279 to 136 in the lower chamber. Almost all Republicans voted in favor of the bill, and 71 Democrats did too.
Former Speaker of the House Nancy Pelosi of California and House Minority Whip Katherine Clark of Massachusetts were two well-known Democrats who voted for the bill.
Heard from Pelosi: The bill was just a “first step.” She hoped to work with the Senate and the Biden administration to make it better.
“Digital money is already a part of our economy, and its importance will only grow in the years to come,” she said. “Lots of Americans have cryptocurrency.” This industry is important to many jobs in my Bay Area community.
The law would give the Commodity Futures Trading Commission (CFTC) more power to regulate the digital asset industry than the Securities and Exchange Commission. It would also create a unique disclosure and registration system for these companies.
The digital asset sector has long said that the SEC’s insistence that these companies follow traditional disclosure rules doesn’t work.
The bill has a hard time in the Senate because many lawmakers have already written their own bills to change crypto rules.
Most of the time, the Senate doesn’t just vote on House bills. An analyst for Capital Alpha Partners wrote in a client note on Wednesday, “It does its own thing.” “So the Senate might want to look at some kind of crypto legislation at some point, but it probably won’t be this one.”
In a public statement Wednesday morning, SEC Chair Gary Gensler spoke out strongly against the bill. This is one of the few times that a top financial regulator has tried to persuade Congress in public.
“The bill would open up new regulatory gaps and overturn decades of precedent,” he said. “This would put investors and capital markets at enormous risk.”
Gensler also said that the law would let con artists get around securities laws by falsely calling their products crypto assets.
However, the business community was happy with both the bipartisan vote and a statement from the Biden administration on Wednesday, in which it said that it does not support the FIT-21 legislation but did not say it would veto it either.
It said in a statement, “The administration is eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets…to promote the responsible development of digital assets.”
Faryar Shirzad, chief policy officer at the cryptocurrency exchange Coinbase COIN, -2.45%, called the statement “a huge step forward” because it’s the first time the White House has acknowledged the need for comprehensive crypto legislation that sets up a custom regulatory regime.
There is also reason to be hopeful after last week’s votes in the House and Senate to overturn SEC accounting guidance that critics say made it too expensive for banks to store crypto assets like bitcoin BTCUSD, -1.86% or ether ETHUSD, 1.28% for their clients.
The fact that the Biden administration is changing its mind and more Democrats are calling for reform could mean that politicians don’t want to be seen as being against the crypto industry.
“This bill is a big win for our efforts to keep politics out of the issue,” Rep. Wiley Nickel, a Democrat from North Carolina, said on X Wednesday. “Regulation is important, no matter how much you like or dislike crypto.” The way things are now isn’t working.
