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FIT21 law seen as solution to problems in US, paving way for thriving market

Supporters of the bill argue that such regulations will encourage innovation, attract investment and give the US a competitive edge in the global fintech sector.

Date: 2024-05-24 Author: Marek Stiller
FIT21 law seen as solution to problems in US, paving way for thriving market

According to Kyle Bligen, director of financial policy at the House Progressive Caucus, Wednesday’s approval of the Financial Innovation and Technology for the 21st Century Act (FIT21) would put the United States on par with other countries in terms of its regulatory framework for cryptocurrencies.

Bligen told Cryptonews in an interview on Thursday that if the FIT21 bill passes the Senate and becomes law, it would stop crypto companies from leaving the United States for countries with clearer regulations.

The legislation would provide greater freedoms for cryptocurrency operators in the US. It would also shift more regulatory responsibility for digital assets to the Commodity Futures Trading Commission (CFTC).

It would also clarify which companies the SEC and CFTC regulate, and create a registration system for those companies. It would allow them to legally serve customers who want to buy and sell digital assets. The SEC would oversee digital assets that are considered securities, while the CFTC would oversee things like commodities and derivatives linked to digital assets.

Outdated laws hinder regulation of cryptocurrencies in the US

Bligen pointed out that the United States is using a nearly century-old law, the Howey Test, developed by the SEC to regulate cryptocurrencies. He argued that the current system is outdated and does not work for the technology.

“I hope this [law] will make the U.S. a regulatory leader who wants strong consumer protections,” he – he said. “We already have the most liquid and attractive capital markets in the US. There’s no reason why we can’t have the best cryptocurrency markets.

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Harry Sudock, chief strategy officer at bitcoin miner GRIID, agrees that the bill will give the US a competitive position on the international crypto scene. In addition, he believes that FIT21 will encourage the brightest minds in the industry to come and stay in the US.

“We’ve seen a lot of companies leave the U.S. or give up doing business here due to regulatory uncertainty,” he said. “FIT21 will help those companies return to the US, but the bill is really just the beginning.”

Obstacle in House of Representatives FIT21 cleared, Senate showdown looming

FIT21’s road to becoming law is not over yet. Although it has successfully passed the House, it still faces a tough battle. For the law to become law, it must be approved by the Senate and then signed by the President.

Ronen Cojocaru, CEO of automated cryptocurrency trading platform 8081, highlighted the unique challenges facing cryptocurrency bills in the Senate. Some senators are familiar with the technology and may be strong supporters or opponents of the FIT21 bill. However, others may lack a deep understanding of the intricacies of cryptocurrency, making them undecided about the legitimacy of the bill.

“Public opinion and the upcoming elections are influencing the decisions of senators, aligning them with their party’s agenda and the interests of voters,” – he said. “Senators can use obstructionism, requiring 60 votes to pass a bill, which is difficult without strong support from both parties.”

Cojocaru also explained why the United States is currently lagging behind other countries. He cited Switzerland, dubbed “Crypto Valley,” as a prime example. Switzerland’s financial regulator, FINMA, fosters innovation by providing clear guidelines for cryptocurrency companies, making it a global hub for the industry.

Singapore has also attracted many companies thanks to its well-defined regulations and supportive policies. Its central bank, the Monetary Authority of Singapore (MAS), has struck a balance between encouraging innovation and protecting consumers. Similarly, Malta, known as the “Blockchain Island,” has become a magnet for cryptocurrency companies thanks to its comprehensive and friendly regulations.

CFTC vs. SEC on cryptocurrency regulation

Meanwhile, founder at Typhon Capital Management, James Koutoulas, said FIT21 needs some work, especially with DeFi. In addition, he stressed the unprecedented power given to the CFTC to regulate cryptocurrencies as a commodity, which goes beyond the usual domain of regulating commodity derivatives.

“But at least for the moment, the CFTC is infinitely less hostile to cryptocurrencies than the SEC , and seems to be focused on implementing regulatory pathways rather than viciously attacking market leaders without statutory authority like the SEC,” Koutoulas said.

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Marek Stiller
Marek Stiller
Founder of the "Cryptocurrency for Beginners" channel on YouTube. He collaborates with Łukasz to form the Arena Trading group, while at the same time being passionate about blockchain technology. His knowledge and experience in the cryptocurrency industry help beginner investors better understand this dynamic market.
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