House of Representatives pass clarity-seeking FIT21 bill with bipartisan support
Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets.
On Wednesday, the US House of Representatives voted on the Financial Innovation and Technology for the 21st Century Act (FIT21) bill. The bill passed 279 to 136, with support from both Republicans and Democrats. This week has been one of the most progressive ever for US crypto policy. This bipartisan support shows this neutral technology is one of the few current topics that is becoming correctly apolitical.
FIT21 aims to finally provide regulatory clarity for the crypto industry within the US. The ultimate goal is keeping, and attracting, crypto-related companies to the US. One element of the bill is to build a framework to better classify when a token is a security or a commodity. The main determination will be if the token has sufficient decentralisation. New tokens will apply for registration initially with the Securities and Exchange Commission (SEC). The SEC will be allocated 90 days to respond. If they deem the token decentralised, it will be deemed a commodity and regulated by the Commodities and Futures Trading Commission (CFTC).
The classification of sufficient decentralisation will include five key areas. All areas require persons related to the company, or founding members, to release control. The first point requires no one within the previous twelve months to have the ability to change the code. It also demands no person being able to prevent any entity from using the product. The second factor states that no token can have any entity own over 20% of the tokens, or have over 20% of the voting rights. Factor three requires no significant code changes in the past three months, unless voted for by the token’s decentralised autonomous organisation (DAO), with only fixing bugs or security allowed by developers’ own accord.
The fourth element requires that the token has not marketed itself as an investment in the past three months. The fifth factor requires that issuers must distribute any new tokens from the past twelve months directly to end-users, or essentially airdropped. Users can earn them by participating in the network or holding another asset. If a token meets all these factors, it would be a commodity and fall under the CFTC’s jurisdiction.
The White House released a statement confirming their opposition to FIT21. They suggested the bill doesn’t have “sufficient protections for consumers and investors.” Despite their adversity, they said they will not veto the bill if it passes in the Senate. Additionally, they state they are “eager to work with Congress” to create “a regulatory framework for digital assets.”
FIT21 passing in the House demonstrates the need, and appetite, for change. However, to make this change become law, the true test will be the support it gains in the Senate.