House Democrats Opt for “No Whip” on Controversial FIT21 Crypto Bill

5 months ago 6

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In a recent development, a report revealed that the House Democrats leaders have stated that they will not whip against the Financial Innovation and Technology for the 21st Century Act (FIT21).

This stance is seen as significant given the ongoing debate over regulating cryptocurrencies and digital commodities.

Background and Concerns Raised by House Democrats

Eleanor Mueller, a reporter at Politico, recently shared an email from the House Democrats regarding the FIT21 Act bill. The email outlines a quick background of the bill and the House Democrat’s overall perspective.

It highlights concerns about language in the bill that treats digital assets sold as “investment contracts” as non-securities, allowing them to be traded in the secondary market. The email notes this language undermines decades of legal precedent, creating uncertainty in traditional securities markets.

“The bill also provides a safe harbor in which entities can file an ‘intent to register’ if they meet certain requirements, effectively shielding them from SEC rules and regulations until the SEC and CFTC finalize their rules, which weakens investor protections and opens the door to fraud and market manipulation,” the email reads.

While the email does not urge the Democrats to vote “no,” it states that Ranking Member Maxine Waters strongly opposes the bill. Ranking Members Waters and David Scott sent a letter to their colleagues to vote “no” on the bill.

They express concerns that the bill would result in the mass deregulation of crypto and some traditional securities. Furthermore, they see this deregulation would severely undermine US capital markets by removing key protections for investors and consumers.

“The entities that stand to benefit from this bill are not ordinary investors trying to build wealth but rather the crypto firms that have chosen not to register with the SEC or otherwise comply with the securities laws. They have already made billions of dollars unlawfully issuing or facilitating the buying and selling of crypto securities. Many of these firms, like Coinbase, are being sued by the SEC for breaking our nation’s securities laws. Now, rather than comply with the law, these firms are lobbying Congress to legitimize their illegal activities,” Ranking Members Waters and Scott wrote in their joint letter.

Conversely, Republican House Financial Services Committee lawmakers announced that the House will vote on the FIT21 legislation this week.

Support and Legislative Progress for FIT21

FIT21 was introduced in July 2023 by Chairman Glenn “GT” Thompson and co-sponsored by several prominent Republicans. It aims to establish clear federal requirements for digital asset markets and balance innovation with robust consumer protections.

Several industry advocates and House members support the bill. The Blockchain Association and Crypto Council for Innovation have both called on House leadership to support FIT21. The Blockchain Association recently sent a letter to House Speaker Mike Johnson and Rep. Hakeem Jeffries, advocating for a floor vote.

“The policy issues facing our industry are complex – and passing this legislation in the House will enable further discussion and debate in the Senate. Therefore, our members urge the House of Representatives to vote “yes” on H.R. 4763,” the Blockchain Association explained.

Besides FIT21, other crypto-focused legislation is also progressing. BeInCrypto recently reported that the US Senate voted to pass H.J. Res 109, a resolution to overturn the SEC’s controversial Staff Accounting Bulletin No. 121 (SAB 121). However, it did not secure enough votes to be veto-proof. President Joe Biden has vowed to veto the resolution, arguing that overturning SAB 121 would weaken the SEC’s ability to protect investors and the financial system from crypto-related risks.

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