The Fit21 encryption bill of the American Republican Party has been approved and will enter the full deliberation of the House of Representatives.

The Fit21 encryption bill of the American Republican Party has been approved for full deliberation in the House of Representatives.

Author: LianGuaiBitpushNews Mary Liu

On the afternoon of July 27th New York time, on the second day of the US House Financial Services Committee passing the Financial Innovation and Technology for the 21st Century Act (Fit21), the House Agriculture Committee gave the green light to the bill, which will soon be sent to the full House for a vote.

Glenn Thompson, Chairman of the Pennsylvania Agriculture Committee, said at Thursday’s hearing: “This legislation marks the efforts of the House Agriculture Committee to create a much-needed regulatory framework for digital assets, protecting consumers and investors while promoting America’s leadership in finance and technology.”

New bill clarifies regulatory framework

This 212-page bill was jointly drafted by Republican members of the Agriculture Committee and the Financial Services Committee, with the aim of addressing regulatory gaps by creating a framework for “specific risks associated with different digital asset activities”. French Hill, Chairman of the Subcommittee on Digital Assets, Financial Technology, and Inclusive Finance, introduced the legislation last week.

• LianGuai Paradigm Stablecoins have their unique characteristics and should not be included in the regulatory frameworks of banks and securities.
• Raft’s ten thousand character research report Decentralized lending protocol, the second largest LSD stablecoin $R issuer.
• Be vigilant of hidden Rug Pulls, as well as exit scams caused by contract storage.

The bill grants the Commodity Futures Trading Commission (CFTC) jurisdiction over digital commodities, clarifies the jurisdiction of the US Securities and Exchange Commission (SEC), and establishes a process for the sale of digital assets that were originally considered securities as commodities.

The bill also sets out the conditions under which digital assets are considered commodities, with decentralization being a primary requirement, and digital asset commodities can be sold on digital asset trading systems registered with the SEC. Market participants must comply with new, more comprehensive disclosure requirements and can register with both agencies.

Disclosure requirements include providing the source code of the project, and the legislation provides clear guidelines for the classification of digital assets, emphasizing that the existence of an investment contract does not automatically classify tokens as securities.

According to the bill summary released by the co-sponsors, about 70% of cryptocurrencies are more suitable to be considered commodities rather than securities. In order to act as a digital asset intermediary, the agency must conduct inspections of companies seeking to register with the SEC as broker-dealers or alternative trading systems.

These agencies also need to work with foreign regulatory bodies to establish consistent regulatory standards. The Government Accountability Office needs to complete a study on non-fungible tokens (NFTs) and how they integrate into traditional markets.

Obstruction by the Democratic Party

On the day before the bill was introduced, Representatives French Hill and Dusty Johnson wrote a letter to SEC Chairman Gary Gensler, criticizing the agency’s so-called “heavy-handed regulation” of the cryptocurrency industry.

Because not all members of the Agriculture Committee endorse the bill, Democratic members, in particular, have expressed concerns about the registration process for cryptocurrency broker-dealers.

Illinois State Representative Jonathan Jackson has proposed an amendment to delete a provision in the bill that allows companies that have submitted “notice of registration intent” to be exempt from certain enforcement actions by the U.S. Securities and Exchange Commission (SEC). Jackson said, “Allowing ‘intent to register’ before these regulations are completed is absolutely unfair to our voters and retail investors, and this industry needs comprehensive regulation and oversight.”

Glenn Thompson countered, stating that “notice of intent” allows companies that meet customer fund handling, disclosure, and record-keeping requirements to engage in limited operations while going through a potentially years-long registration approval process. The bill also allows the Commodity Futures Trading Commission to take enforcement actions against companies that have completed the “notice of intent” process.

Jackson’s amendment did not receive committee approval.

However, the committee did support a proposed amendment by Representative Yadira Caraveo, which aims to modify the “notice of intent” provisions. Under this amendment, these companies would be obligated to inform consumers that they have not yet obtained full approval.

Innovation is the theme of the Fit21 bill hearing, with proponents believing that the bill will position the United States at the center of potentially revolutionary emerging technologies. Republican Representative Tom Emmer of Minnesota said, “America’s leadership in the global economy is benefited by our ability to harness innovation to make markets and communication more efficient.”

Opponents argue that innovating for the sake of innovation is dangerous. Congressman Brad Sherman (Democratic Party, California) questioned whether the crypto industry has any innovation, stating in the hearing, “I don’t believe [Satoshi Nakamoto] is innovative.”

The Commodity Futures Trading Commission (CFTC) is welcomed by the industry for its more open attitude towards crypto companies compared to the SEC, with Democrats expressing concerns that this could lead to future fraudulent activities. However, Republicans supporting the bill believe that the additional $120 million in funding recently approved by the Agriculture Committee will provide the CFTC with a larger budget to carry out related regulatory work.

Therefore, the passage of this bill in the Democrat-controlled Senate remains uncertain.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!