Landmark cryptocurrency bill passes House, moves to Senate

The U.S. House of Representatives passed a crypto market structure bill on Wednesday evening that aims to regulate the industry at large.

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The bill, “The Financial Innovation and Technology for the 21st Century Act” (FIT21), would effectively classify cryptocurrency as a commodity, not a security, and therefore exempt from securities regulations. It would also determine oversight of cryptocurrencies, whether they should be regulated by the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).

The Republican-led bill — the first standalone legislation of its magnitude — passed with a 279-136 vote in the lower chamber, gaining support from 71 Democrats, including former Speaker of the House Rep. Nancy Pelosi of California.

The crypto bill cleared the U.S. House despite criticism from SEC Chair Gary Gensler, who publicly expressed his opposition to it.

Gensler stated, “FIT21 would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk.” He reiterated his stance on cryptocurrency as securities, expressing concern that the bill would exclude blockchain-recorded investment contracts from the statutory definition of securities and, hence, the protections of the federal securities laws.

Yesterday, hours before the vote, the White House also expressed opposition to the bill, citing concerns due to inadequate investor protections. President Biden released a statement saying that he is against the legislation, but he hasn’t threatened to veto it.

What’s next?

The bill must now gain approval from the Senate, but this will be challenging as the leading figures in the Democrat-controlled Senate have shown little interest in it.

There is a very low chance that the bill would become law in Congress, but it can shed light on how Democrats and Republicans view crypto regulation.

In an election year when crypto has become a political issue — with the presumptive Republican presidential nominee, Donald Trump, accepting crypto donations and Democrats showing a softer stance on crypto — the reactions of both political parties are important.

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