As the 2024 presidential election draws near, digital assets have emerged as an unexpected political battleground. In a landmark vote, the Republican-controlled House of Representatives passed the Financial Innovation and Technology for the 21st Century Act, better known as the FIT21 Act, with significant bipartisan support.
The 279-136 tally saw an unusual coalition, with 71 Democrats, including former Speaker Nancy Pelosi, joining their Republican colleagues in backing the legislation. Only three Republicans voted against it, while 133 Democrats were in opposition.
The FIT21 Act promises to bring long-awaited clarity to the regulatory landscape for cryptocurrencies and other digital assets, a priority for the industry. Though the Biden administration voiced concerns prior to the vote, it stopped short of threatening a veto, providing relief to crypto proponents.
At the heart of the bill is an effort to resolve the protracted “turf war” between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over oversight of the crypto sector. Republican Rep. Patrick McHenry, co-sponsor and House Financial Services Committee chair, heralded it as “the biggest moment in crypto policy and legislating in United States history thus far.”
Rashan Colbert, policy head at decentralized trading platform dYdX Trading, echoed that sentiment, calling it a crucial symbolic milestone that demonstrates political will to regulate digital assets. Even if progress stalls in the Senate ahead of elections, he argued the bill lays valuable groundwork for future bipartisan cooperation.
The FIT21 Act aims to establish clear definitions for crypto assets and delineate jurisdictional boundaries between the SEC and CFTC. Crucially, it would grant the CFTC, seen as more industry-friendly, expanded authority over the sector, with asset classifications determining whether the SEC or CFTC has oversight.
This jurisdictional shift, however, has proven deeply controversial. Democratic Rep. Maxine Waters denounced FIT21 as a “wish list of big crypto” that would create a “regulatory no-man’s land” by stripping the SEC of power over certain securities. Rep. Stephen Lynch warned it could precipitate market volatility and recession.
Despite such objections, the bill’s proponents, including some Democrats like Rep. Wiley Nickel, argued updating “90-year-old securities law” is crucial for the digital age. They contended clear rules would protect consumers and ensure U.S. competitiveness as other nations outpace America in crypto regulation.
The crypto industry itself mounted a concerted lobbying push, with major players like Coinbase, Andreessen Horowitz, and Kraken signing a letter supporting FIT21. They warned that regulatory uncertainty could drive innovation overseas, jeopardizing American leadership.
With the bill now headed to the Senate, the crypto policy battle is far from over. Yet the House vote represents a watershed moment that could shape the future trajectory of digital assets in American policy and politics.