As an analyst with a background in finance and experience in the cryptocurrency industry, I am thrilled about the potential passing of the Financial Innovation and Technology for the 21st Century Act (FIT21). This bill could bring much-needed clarity to the regulatory landscape for digital assets in the United States.
As a researcher, I’m excited to share that we may see the approval of the long-anticipated “Financial Innovation and Technology for the 21st Century Act” this month. This bill, whose full title reflects its purpose, could bring clarity and ease of understanding to the regulation of cryptocurrencies for all of us.
Towards the end of this month, the House of Representatives is scheduled to cast votes on a pivotal piece of legislation – HR 4763, also referred to as the Financial Innovation and Technology for the 21st Century Act (FIT21). This bill holds great importance for the crypto industry, as it aims to bring much-needed clarity to U.S. regulations surrounding cryptocurrencies.
Should FIT21 be approved, it paves a secure and efficient route for the introduction of blockchain initiatives in the US. The act clarifies the roles of the SEC and CFTC regarding the classification of digital assets as securities or commodities. Moreover, it establishes regulatory frameworks for crypto exchanges and strengthens consumer protection by instituting guidelines on cryptocurrency trading.
As per the proposed legislation, the Commodity Futures Trading Commission (CFTC) would be responsible for overseeing a digital asset if the underlying blockchain or digital ledger is operational and lacks central control. On the other hand, the Securities and Exchange Commission (SEC) would regulate a digital asset if its associated blockchain functions effectively but fails to meet the criteria of decentralization. The bill sets forth that decentralization exists when neither an individual nor any related party holds the power to manage the blockchain or dictate its usage, and no entity or affiliated person possesses more than 20% of the digital asset or its voting rights.
The legislation additionally sets forth various consumer safeguards, including the mandate to keep client funds separate, time restrictions for insider access, caps on yearly sales quantities, and mandatory disclosures.
In the US, where the crypto industry has existed for over a decade, there remains a significant absence of clear regulatory guidelines. This ambiguity poses difficulties for progress and development within the industry. For instance, legitimate businesses and new ventures have endured “regulation through enforcement,” which stifles innovation and hinders economic advancement in the US crypto sector. Consequently, many crypto-related companies are relocating to more accommodating jurisdictions.
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2024-05-21 12:23