House advances FIT21 Act for digital asset regulation

The move is intended to pave the way for a potential floor vote later in May 2024. The FIT21 Act aims to provide regulatory clarity for digital assets, addressing longstanding uncertainties that have hindered innovation and consumer protection in the US digital asset ecosystem. 

The legislation, led by bipartisan efforts and collaboration between the House Financial Services and Agriculture Committees, aims to establish a clear regulatory framework for digital asset markets. It is designed to offer robust consumer protections and regulatory certainty, aiming to support innovation and improve the United States' position in the global financial system.

A closer look at the FIT21 Act 

According to theblock.co, the bill was passed out of the House Financial Services Committee and the House Agriculture Committee in summer 2023. The legislation faces more of an uphill battle than a bill to regulate stablecoins, which has seen some movement over the past year. 

In an announcement that FIT21 would be getting a vote, House Financial Services Committee Chair Patrick McHenry, R-N.C., called the bill a bipartisan effort ‘to finally provide clarity.’ Key provisions of the FIT21 Act include granting the Commodity Futures Trading Commission (CFTC) new jurisdiction over digital commodities, clarifying the Securities and Exchange Commission's (SEC) oversight of digital assets offered as investment contracts, and establishing procedures for secondary market trading of digital commodities. Additionally, the bill imposes comprehensive disclosure, asset safeguarding, and operational requirements on entities registered with the CFTC and/or the SEC. 

The legislation also aims to protect consumers by enhancing transparency and accountability among digital asset developers and customer-serving institutions, such as exchanges, brokers, and dealers. It seeks to strengthen the market by providing clarity on regulatory jurisdiction and facilitating fundraising for digital asset projects. 

According to the Financial Services Committee, the FIT21 Act represents a step forward towards providing the regulatory clarity needed for the digital asset ecosystem to move forward in the United States. Its advancement to the House floor also reflects ongoing efforts to address regulatory uncertainties and promote innovation in the rapidly evolving digital finance sector.