Crypto Industry Rallies Behind House Bill as It Heads Toward Final Vote

A broad swath of the crypto industry has signed a letter to top lawmakers in the U.S. House of Representatives explaining why they should get behind the Financial Innovation and Technology for the 21st Century Act.

As House lawmakers prepare to vote on the bill next week, the letter states that this bill will help the United States keep pace with its global competitors.

The US House of Representatives is on the verge of a vote that would represent the closest the cryptocurrency industry has ever come to winning regulation in the US, and the industry’s associations and top businesses are encouraging House leaders to support the effort.

Coinbase wrote a letter to House Speaker Mike Johnson (R-La.) through the Crypto Innovation Council, a coalition of digital asset organizations and companies including Kraken, Andreessen Horowitz, Digital Currency Group and nearly 50 others. Minority Leader Hakeem Jeffries (DY) is advocating for passage of the bill. The Financial Innovation and Technology for the 21st Century Act (FIT21) has been authorized for session next week, where observers hope to see a vote by midweek.

The bill would designate the Commodity Futures Trading Commission (CFTC) as the lead regulator of digital assets and lays out clear distinctions about what the CFTC will handle and what will fall under the purview of the Securities and Exchange Commission (SEC). It will ensure consumer protection, including rules regarding the custody of customers’ assets and treatment of them in the event of bankruptcy, and create a greater firewall against risky behavior.

“By enacting this legislation, we can accelerate the growth of blockchain technology and digital assets, promote financial inclusion, and protect national security,” according to the letter. “It is crucial that the United States maintains its leadership in financial innovation.”

The crypto industry is currently on a high in Washington, having watched both the House and Senate easily pass a resolution overturning the SEC’s crypto accounting policy, although President Joe Biden has vowed to veto the effort. This move to delete the SEC’s Staff Accounting Bulletin 121 (SAB 121) certainly represented a fight in the industry’s favor and attracted many supporters from the Democratic Party, which has been more reticent than Republicans to support crypto.

In this accounting dispute, more than a fifth of Senate Democrats, including Majority Leader Chuck Schumer (DY), voted on the industry side, compared with about one in 10 Democrats in the House.

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But the sweeping legislation now approaching a House vote is much larger in size, and key Democrats in the Senate appear unprepared so far to keep up with the House’s efforts. To date, the Senate has only shown a potential willingness to fit a different crypto bill — a law regulating stablecoin issuers — into a package deal with other financial legislation.

Rep. Patrick McHenry (R.N.C.), chairman of the House Financial Services Committee where the bill was introduced, said the level of Democratic support for FIT21 in the House could be a key factor in whether the Senate takes action. When the measure cleared the committee, he did so with a handful of Democrats despite opposition from ranking member Rep. Maxine Waters (D-Calif.).

As we move towards the work of FIT21, a number of changes have been made that the House Rules Committee has called for to meet the May 16 deadline.