Is the House’s FIT21 Bill Really the Legislation That Crypto Needs?

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Should the bill be approved, it will establish a regulatory structure for digital assets, providing clarity on whether a specific token falls under the category of a security or commodity. The primary expectation is that this legislation will expand the Commodity Futures Trading Commission’s jurisdiction over cryptocurrencies. However, it’s important to note that the Securities and Exchange Commission is expected to maintain a substantial role in governing the crypto industry as well.

Although some view the bill as a significant shift in the regulatory landscape for cryptocurrencies in the US, not all share this optimistic perspective.

Expert Gabriel Shapiro commented on X: “The SEC’s regulatory power wouldn’t be transferred to another agency; it would remain significant. This legislation proposes a two-pronged regulatory system, with both the SEC and CFTC holding authority. It achieves this by granting the CFTC jurisdiction over the spot commodities market, an area where it previously had no control.”

“I’ve never encountered a commodities market for spot trading that is fully regulated. We’re essentially transferring all the power to the Commodity Futures Trading Commission (CFTC), and I hope they prove to be rational and competent leaders, despite some past concerns about their decision-making.” (Note: The reference to Gary is not included in this paraphrase.)

From a researcher’s perspective, the proposed legislation can be seen as a means for the government to officially endorse practices that businesses have been implementing without prior authorization. This could also lead to the establishment of an entity empowered to regulate what were previously considered unfettered marketplaces.

As a researcher studying the intersection of law and cryptocurrencies, I can relate to the sentiment expressed by Stephen Palley, a prominent figure in this field. I must admit, I share his disapproval towards this particular aspect.

As a crypto investor, I’ve noticed some concerns about the potential impact of new regulations on the market. One criticism is that the proposed rules may give the Commodity Futures Trading Commission (CFTC) excessive jurisdiction over spot markets and create a privileged position for existing players. In simpler terms, it might limit competition and favor the incumbents. However, I can’t help but wonder if some of us asked for these new laws in the first place. Palley, a partner at Brown Rudnick, echoed this sentiment.

As a researcher examining the criticisms of Shapiro and Palley towards the proposed financial reform bill, I find it intriguing that their concerns align with those expressed by Maxine Waters, the ranking Democrat on the House Financial Services Committee. In her assessment, she deemed it one of the worst bills she has encountered. The potential implications of this legislation extend beyond straining the resources of the Commodity Futures Trading Commission (CFTC), which employs approximately 700 people compared to the Securities and Exchange Commission’s (SEC) workforce of 4,500. Moreover, it could undermine ongoing legislative initiatives, such as the stablecoin bill that Waters collaborated on with House Financial Services Chair Patrick McHenry (R-NC).

As a thorough analyst, I would suggest paraphrasing it as follows in the first person perspective:

“Let me let you [in] on a secret that the big crypto doesn’t want you to know even under this bill,” Waters said. “The CFTC does not get enough authority to regulate crypto in this bill.”

Similarly, SEC Chairman Gary Gensler has expressed that this initiative could lead to additional complexity and inconsistencies rather than resolving issues. For a long time, Gensler has maintained that the existing legislation is sufficient, and there should be no special regulations for cryptocurrencies.

As a crypto investor, I’ve noticed that the bipartisan vote in the crypto industry is being viewed as a significant milestone for our community. It’s a symbol of acceptance and potentially the start of a brighter future. This development follows closely on the heels of the House and Senate’s decision to repeal the controversial SEC accounting rule, which was seen as an unnecessary burden. As we move forward, I believe that common sense will continue to guide the regulatory landscape for crypto.

As a crypto investor, I’ve been keeping a close eye on FIT21 and its potential impact on the cryptocurrency market. However, recent developments have led some experts, including TD Cowen, to believe that the bill may not make it through this Congress. If this turns out to be true, then perhaps we can take solace in the fact that this potential regulatory hurdle may not materialize after all. In other words, it seems like a piece of good news for us crypto investors worth celebrating.