Fresh Regulations for Digital Currency Sector Approved by Legislature

In a significant move, the legislature passed new regulations for the digital currency sector on Wednesday, signaling potential changes to the oversight of cryptocurrencies. However, the bill faces hurdles in the Senate, dampening hopes for immediate implementation.

House Approval, Senate Uncertainty

The measure, named the Financial Innovation and Technology for the 21st Century Act (FIT 21), secured House approval with a vote of 279 to 136. Notably, 71 House Democrats crossed party lines to support the bill, highlighting bipartisan interest in addressing digital asset legislation.

FIT 21 Act’s bipartisan support signals vital progress in digital asset regulation, fostering financial innovation, Barron’s Print Edition said.

Path for Crypto Exemption

FIT 21 outlines a pathway for cryptocurrencies to be exempt from certain securities regulations once they meet specified criteria, including decentralization. This contrasts with the current oversight by the Securities and Exchange Commission (SEC), potentially expanding the industry beyond the agency’s jurisdiction.

Senate Outlook and Progressive Concerns

The bill passed the House, but its future in the Senate is uncertain. Senate Democrats lack a similar bill, causing doubt. Progressive factions worry about investor risks and SEC Chair’s opposition to FIT 21 adds weight. Election season complicates swift action.

Political Influence and Industry Support

Critics argue that political contributions and lobbying efforts from industry leaders, such as Coinbase Global, are influencing legislative decisions. These concerns have prompted opposition from organizations like Americans for Financial Reform and the AFL-CIO, citing insufficient investor safeguards and potential loopholes benefiting Wall Street firms.

White House Stance and Future Prospects

The White House opposes the bill but won’t veto, showing readiness for collaboration on digital asset legislation. Despite legal clashes like Coinbase vs. SEC, FIT 21 is seen vital for innovation and regulatory clarity.

Implications for Future Legislation

FIT 21 lays groundwork for future legislative endeavors amidst industry sway and political changes. Donald Trump’s campaign embracing crypto donations might bolster the bill’s traction. This could influence regulatory frameworks in forthcoming sessions. Though not imminent, FIT 21’s impact could be substantial.

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