House Financial Services Committee Chairman Patrick McHenry said new legislation that will give the crypto industry greater clarity regarding regulatory oversight is set for a potential House floor vote by the end of May.
The proposed legislation — dubbed the Financial Innovation and Technology for the 21st Century (FIT21) Act — aims to provide clear regulatory frameworks for digital assets, addressing longstanding issues of market oversight and consumer protection.
Much-needed legislation
McHenry said on May 10 that the consideration process will give the “much-needed legislation the floor time it deserves.”
He added:
“For far too long, the U.S. digital asset ecosystem has been plagued by regulatory uncertainty that has stifled innovation and left consumers unprotected.”
Crypto Council CEO Sheila Warren explained that consideration will occur during the week of May 20.
The House Committee on Rules, which is composed of nine Republicans and four Democrats, will likely consider the legislation under a “structured rule” that determines which amendments can be considered as well the amount of time set for debate on each side.
The committee will determine whether FIT21 should go to a floor vote by the end of May. The bill must also proceed through the Senate and the President.
SEC-CFTC distinction
FIT21 gives the CFTC jurisdiction over crypto commodities and assigns the SEC jurisdiction over crypto offered within investment contracts.
The legislation explicitly aims to establish “clear lines between the SEC and CFTC.” The SEC’s continuously expanding enforcement efforts have become highly controversial in recent years, and as such, FIT21 could address one of crypto’s most high-profile controversies.
The distinction is intended to help crypto developers with a way to raise funds and clarity on whether their activities are subject to CFTC or SEC oversight.
In addition to separating regulators’ roles, the bill also creates a process to permit the secondary market trading of crypto commodities first offered in an investment contract.
FIT21 also sets rules for companies that must register with the SEC and CFTC, including requirements around customer disclosure, asset safeguarding, and operations.
House Committee on Agriculture Chairman Glenn Thompson, Whip Tom Emmer, and Representatives French Hill, Dusty Johnson, and Warren Davidson introduced the bill in July 2023.