U.S. House Passes Crypto FIT21 Bill with Strong Democratic Backing

The embattled industry on Wednesday recorded its biggest-ever victory for U.S. policy, with the House of Representatives voting 279-136 to approve far-reaching legislation designed to establish regulations for the digital assets markets after Democrats crossed party lines in support.

And so it was that the House passed the first full crypto bill ever—a piece of legislation known as the Financial Innovation and Technology for the 21st Century Act, or FIT21. The issue now goes to the U.S. Senate, where its prospects are much less clear: There isn't a companion bill, support for such an endeavor is of questionable level, and the relevant committees haven't done a similar level of work on crypto.

The U.S. is already behind other global jurisdictions in establishing crypto regulations, with those in Wednesday's victory being only part of oversight.

"We need rules of the road," said Rep. Josh Gottheimer (D-N.J.), one of the Democrats who bucked the opposition of the White House and the ranking Democrat on the House Financial Services Committee, Rep. Maxine Waters (D-Calif.). He called the bill "well-reasoned, thoughtful, bipartisan legislation" and argued before the vote that "it's fit to become law if we work together."

While 208 Republicans and 71 Democrats were in favor of the bill, an opposition of 133 Democrats and 3 Republicans expressed non-conformity. White House press secretary Jen Psaki said the White House strongly opposed the bill in a policy statement but not to the point of threatening a veto, as Biden had done when Congress just days earlier tried to quash a new Securities and Exchange Commission (SEC) initiative to require crypto accounting. And then SEC Chair Gary Gensler took to the public comment ropes with a single-spaced screed against the legislation for being unnecessary and endangering existing securities regulations.

This would enact a new regulatory regime for the U.S.-based crypto markets, with consumer protections, an expanded role for the Commodity Futures Trading Commission as a top regulator of digital assets and the watchdog of the non-securities spot markets, clearly defining whether a crypto token is a security or a commodity.

For instance, Waters argued that the bill is hoping to offer a free pass for crypto businesses that have been skirting securities laws all along.

"They have already made billions of dollars unlawfully issuing or facilitating the buying and selling of crypto securities," Waters said. "And Republicans are now proposing to reward these illegal activities by making these activities legal." Wednesday afternoon's vote marked the first time the House had previously considered just a small clutch of amendments to the bill, including some sponsored by Reps. Greg Casar (D-Tex.), Brittany Pettersen (D-Co.), Ralph Norman (R-S.C.) and Scott Perry (R-Pa.). The one defeated was Casar's amendment seeking to downsize a crowdfunding exemption from $75 million to $5 million.