McHenry Delivers Opening Remarks at Historic Markup of Comprehensive Digital Asset Market Structure Legislation
The FIT for the 21st Century Act is the product of unprecedented coordination between the House Financial Services and Agriculture Committees
Washington,
July 26, 2023 -
Today, the House Financial Services Committee, led by Chairman Patrick McHenry (NC-10), is holding a markup of legislation to provide clear rules of the road for the digital asset ecosystem and address national security concerns. The FIT for the 21st Century Act is a historic first step towards achieving legislative clarity for digital assets, providing robust, time-tested consumer protections, and facilitating a regulatory environment that allows this technology to flourish in the United States.
Watch Chairman McHenry’s opening remarks here.
Read Chairman McHenry’s opening remarks as prepared for delivery:
“We’re here to take a historic step for American innovation and consumer protection as we undertake the first ever legislative markup of digital asset legislation.
“The legislation we are considering today is more than a decade in the making.
“Fifteen years ago, the Bitcoin White Paper was published under the pseudonym Satoshi Nakamoto. The paper envisioned a global financial network built on peer-to-peer, permissionless transactions of digital assets using public, cryptographically protected distributed ledger technology.
“Since then, thousands of builders, innovators, and entrepreneurs have worked to make that vision of a more inclusive financial system a reality.
“Terms like cryptocurrency, blockchain technology, and the digital asset ecosystem are now part of the everyday lexicon for millions of Americans and people around the world.
“Developers are using blockchain technology as the building blocks to create the next generation of decentralized internet technology, also known as web3, which will give individual users more ownership over their data, transactions, and finances.
“For more than a century, America has been the global leader in technology innovation, invention and adoption. The ideas turned into innovative technology by American ingenuity have been central to human progress, and digital assets are no different.
“As other jurisdictions like the UK, the EU, Singapore, and Australia move forward with clear regulatory frameworks for digital assets, the United States is at risk of falling behind. Today, this Committee is taking the first step to fix this.
“I remind my colleagues that joint stock companies were once an innovation that some claimed were only used to facilitate fraud. It took decades to figure out how to properly regulate these, which were the predecessors to modern-day LLCs and equity stock ownership.
“Just as joint stock companies revolutionized how companies are owned, digital assets and their underlying blockchain technology hold the same promise to revolutionize ownership in the digital economy.
“Modern American banking law also developed over generations, from Lincoln’s National Currency Act to the Interstate Banking and Branching Efficiency Act of the 1990s.
“We are taking similar action today by bringing these new innovations into the regulatory perimeter.
“Our comprehensive digital asset market structure legislation recognizes a key issue: digital assets that are not inherently securities may be offered as part of an investment contract but that does not make them securities.
“To clarify how the Supreme Court’s Howey Test applies to digital assets, our bill focuses on two key issues—decentralization and functionality. That is the crux of the FIT for the 21st Century Act, the pairing of those two factors.
“This legislation was not developed in a vacuum. It is the result of years of bipartisan efforts and numerous hearings—from the bipartisan hearings on Facebook’s now defunct Libra project to our bipartisan investigation into the collapse of FTX to the record six digital asset hearings we’ve held this year alone.
“This now includes our unprecedented collaboration with the House Agriculture Committee as well.
“Our bill also responds directly to calls from this administration—the Biden Administration—for Congress to act, through the reports issued under Biden’s executive order and from the President’s Working Group on Financial Markets.
“And finally, it’s important to note that this legislation includes the robust consumer protections that Members on both sides of the aisle have called for.
“At its core, this bill ensures everyday investors are not left with less protection than institutional investors.
“Additionally at today’s markup we will consider Majority Whip Tom Emmer’s Blockchain Regulatory Certainty Act.
“We will also consider several bipartisan bills to protect our National Security, including Mr. Nunn’s Financial Technology Protection Act, Subcommittee Chairman Luetkemeyer’s Stop Fentanyl Money Laundering Act, Ranking Member Waters’ No Russian Agriculture Act, and Mr. Lynch and Nunn’s Exposing China’s Support for the Taliban Act.
“I look forward to a robust debate today and taking the first step to provide much-needed legal clarity and certainty for the digital asset ecosystem.”
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