US Crypto law passed despite opposition from Joe Biden

The Financial Innovation and Technology for the 21st Century Act (FIT21) was passed by the U.S. House of Representatives on May 22. Commonly referred to as the Crypto Act, this text clarifies the roles of State regulators and sets the rules applicable to digital assets among other things. The adoption of this text has been warmly welcomed by players in the crypto ecosystem. A look back at this important law.

Crypto bill crosses partisan divide in the US

It’s arguably one of the biggest regulatory victories for the Crypto industry in the US this year. While the SEC has always considered that the crypto industry does not need special regulation the US House of Representatives passed the crypto bill on May 22, 2024. According to knowledgeable sources the Financial Innovation and Technology for the 21st Century (FIT21) bill passed with 279 votes in favor and 136 against.

Shortly before the vote, U.S. President Joe Biden was clearly opposed to the adoption of the crypto law. In particular, the White House had stated in a statement that the text does not sufficiently protect consumers and investors engaging in crypto. The statement by Joe Biden was not followed, even in his own political party. Of the 279 votes in favor of the bill, 71 came from Democratic Party representatives.

A step towards greater regulatory clarity

Crypto industry players have always decried regulatory ambiguity in the United States. The Financial Innovation and Technology for the 21st Century Act (FIT21) responds to this challenge. The text thus pursues a triple objective: establish clear regulation, protect investors without compromising innovation, and support the integration of Crypto into the traditional financial system.

As an example, the text clearly defines digital assets, including Crypto and other forms of Blockchain-based assets. This could help reduce the debate over the qualification of certain assets. We recall, for example, that Ethereum (ETH) is qualified sometimes Security, sometimes Commodity. This has a negative impact on players in the ecosystem such as Kucoin.

In addition, the Financial Innovation and Technology for the 21st Century Act (FIT21) establishes jurisdiction between the Commodity Futures Trading Commission (CFTC) and the Security and Exchange Commission (SEC). These two state regulators have always had overlapping responsibilities when it comes to crypto.

Community reactions: Euphoria for some, fear for others

Reaction to the vote on the Financial Innovation and Technology for the 21st Century (FIT21) Act was swift. For pro-crypto Senator Cynthia Lummis the passage of FIT21 proves that there is strong bipartisan support in Congress for the creation of a regulatory framework for the crypto industry.

The same sense of satisfaction comes from the CEO of Coinbase, the exchange which had filed a complaint against the SEC to demand clear crypto regulation. Brian Armstrong described the vote of 71 Democrats as a total victory. Armstrong also praised a historic vote, paving the way for clear rules to regulate crypto.

The passage of the crypto law isn’t making only optimists in the ecosystem. Gabriel Shapiro, crypto lawyer, estimates that FIT21 reinforces the power of state regulators. For this legal expert, the Crypto Act still gives the SEC “enormous power” and provides for a dual regulatory regime allowing the CFTC to have authority over a market where it should never have intervened.

For the time being, the Financial Innovation and Technology for the 21st Century Act (FIT21) will not come into force. The text must also be debated and voted on in the Senate before being approved by Joe Biden. In the U.S. Senate, Cynthia Lummis should be counted on to block Democrat Elizabeth Warren, who is spearheading the anti-crypto slingshot. For his part, Joe Biden may not veto the bill. In any case, this is what emerges from his statement.