House to Consider Financial Innovation and Technology for the 21st Century Act
Rules Committee action will precede floor consideration of digital asset market structure legislation
Washington,
May 10, 2024 -
Today, the House Committee on Rules publicly noticed its intent to consider the Financial Innovation and Technology for the 21st Century (FIT21) Act, clearing a pathway for a floor vote later this month. The FIT for the 21st Century Act is an important first step towards achieving regulatory clarity for digital assets. FIT21 provides the robust, time-tested consumer protections and regulatory certainty necessary to allow the digital asset ecosystem to flourish in the United States.
“For far too long, the U.S. digital asset ecosystem has been plagued by regulatory uncertainty that has stifled innovation and left consumers unprotected,” said House Financial Services Committee Chairman Patrick McHenry (NC-10). “This comprehensive market structure legislation—the Financial Innovation and Technology for the 21st Century Act—is the culmination of years of bipartisan efforts to finally provide clarity. This includes an unprecedented joint effort by the House Financial Services and Agriculture Committees, numerous hearings, and feedback from members and stakeholders alike. With the floor vote announced today, Congress will take a historic step to provide a clear regulatory framework for digital asset markets. This legislation will cement American leadership of the global financial system for decades to come and bolster our role as an international hub for innovation. I thank Speaker Johnson, Leader Scalise, and Whip Emmer for giving this much-needed legislation the floor time it deserves. I look forward to taking a monumental step to finally deliver the transparency, accountability, and consumer protections that the digital asset ecosystem desperately needs.”
“FIT21 is a regulatory foundation to safeguard consumers and investors but also propels American leadership in digital finance,” said House Committee on Agriculture Chairman Glenn “GT” Thompson (PA-15). “Our collaborative effort establishes the essential clarity and security needed to foster innovation and ensure our nation's prominence in the global technological revolution. This is the product of extensive feedback from stakeholder and market participants and historic coordination with the Financial Services Committee. This legislation is desperately needed, and I am excited to be able to advance that effort today.”
“After tirelessly working across the aisle and across the nation over the past year to craft a clear, pragmatic regulatory framework for digital assets, I am proud that this landmark legislation is coming to the House Floor,” said Congressman French Hill (AR-02). “As the collapse of FTX demonstrated, we need strong consumer protections and a functional regulatory framework to ensure the rapidly growing digital asset ecosystem is safe for investors and consumers while securing America as a leader for blockchain innovation. I particularly thank Chairman Patrick McHenry, House Agriculture Committee Chairman G.T. Thompson, and Agriculture Subcommittee Chairman Dusty Johnson for their leadership and collaboration, and I applaud each of the members of our committees that have helped this significant legislation move one step closer to becoming law.”
“The FIT for the 21st Century Act is a historic piece of legislation with two committees working jointly to craft a framework for digital assets in the U.S.,” said Congressman Dusty Johnson (SD-AL). “There’s been a regulatory gap for far too long, and America is at risk of losing innovative markets to other countries who have already established regulations for market participants. It’s time to provide clarity and regulatory authority to the Commodity Futures Trading Commission and Securities Exchange Commission to provide customer protections and market oversight. I welcome the Committee’s action on our bill and hope to see it on the House Floor soon.”
View text of the Financial Innovation and Technology for the 21st Century Act here.
Background:
On July 20, 2023, Chairman Glenn “GT” Thompson, Rep. French Hill, Rep. Dusty Johnson, Whip Tom Emmer, and Rep. Warren Davidson introduced H.R. 4763, the Financial Innovation and Technology for the 21st Century Act (FIT21). Chairman Patrick McHenry is a cosponsor of the legislation.
FIT21 establishes clear and functional federal requirements over digital asset markets. It provides the robust consumer protections and regulatory clarity necessary for the digital asset ecosystem to thrive in the U.S.—cementing American leadership of the global financial system of the future while reinforcing our role as a hub for innovation.
The legislation provides the Commodity Futures Trading Commission (CFTC) with new jurisdiction over digital commodities and clarifies the Securities and Exchange Commission’s (SEC) jurisdiction over digital assets offered as part of an investment contract. Additionally, the bill establishes a process to permit the secondary market trading of digital commodities if they were initially offered as part of an investment contract. Finally, H.R. 4763 imposes comprehensive customer disclosure, asset safeguarding, and operational requirements on all entities required to be registered with the CFTC and/or the SEC.
FIT21 will protect consumers by strengthening transparency and accountability with market participants:
- Digital asset developers will be required to provide accurate, relevant disclosures, including information relating to the digital asset project’s operation, ownership, and structure; and
- Digital asset customer-serving institutions, like exchanges, brokers, and dealers will be required to:
- Provide appropriate disclosures to customers;
- Segregate customer funds from their own; and
- Reduce conflicts of interest through registration, disclosure, and operational requirements.
FIT21 will strengthen the market by protecting digital asset projects:
- Digital asset developers will have a pathway to raise funds; and
- Participants will have a clear process to determine which digital asset transactions are subject to the SEC’s jurisdiction and the CFTC’s jurisdiction.
FIT21 will protect digital asset customer-serving institutions by:
- Establishing clear lines between the SEC and CFTC; and
- Creating comprehensive registration regimes to permit them to lawfully serve customers in digital asset markets.
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