Today, the U.S. House of Representatives passed H.R. 4763, the “Financial Innovation and Technology for the 21st Century Act,” in a watershed moment for the U.S. digital asset ecosystem. FIT21 provides the robust, time-tested consumer protections and regulatory certainty necessary to allow digital asset innovation to flourish in the United States.
“Today, the House took a historic step by passing FIT21 with broad, bipartisan support,” said Chairman Patrick McHenry (NC-10). “FIT21 provides the regulatory clarity and robust consumer protections necessary for the digital asset ecosystem to thrive in the United States. The bill also ensures America leads the financial system of the future and remains a hub for technological innovation. I appreciate the partnership of Chairman Thompson, as well as Congressmen French Hill and Dusty Johnson. This landmark initiative would not be possible without their steadfast leadership. The overwhelming support for FIT21 in the House should serve as a wakeup call to the Senate and this Administration. They must come to the table to ensure the Americans who engage with digital assets can do so safely.”
“Clarity in digital assets is crucial. Today's bipartisan passage of the Financial Innovation and Technology for the 21st Century Act is a significant milestone. It underscores the House Committees on Agriculture and Financial Services' efforts to establish a much-needed regulatory framework,” said Chairman Glenn “GT” Thompson (PA-15). “This framework is designed to protect consumers and investors while fostering American leadership in the digital asset space. I extend my thanks to Chairman McHenry for his leadership and that of our subcommittee chairs, Rep. Johnson and Rep. Hill, in moving this legislation.”
“Today is a historic day for American consumers, investors, and innovators. I applaud the House’s bipartisan passage of FIT21, which crafts a ‘fit for purpose’ regulatory framework for digital assets that protects consumers and investors while securing the United States as a leader in blockchain innovation. As FTX’s collapse showed, we need a functional regulatory framework in place to create consumer protections that currently do not exist, while ensuring America is a leader in the digital asset market,” said Rep. French Hill (AR-02). “This legislation passed in a bipartisan manner, signaling that consumer protection and American innovation are priorities for lawmakers on both sides of the aisle. I thank House Financial Services Chairman Patrick McHenry, House Agriculture Committee Chairman G.T. Thompson, and Agriculture Subcommittee Chairman Dusty Johnson for their outstanding leadership and collaboration on this bill, and I applaud each member of our committees who worked tirelessly to move this landmark legislation across the House Floor. FIT21 is the first legislation of its kind in United States history to pass a chamber of Congress, and I remain committed to pushing this legislation forward until it becomes law.”
“House passage of FIT21 is necessary to bring stability and clarity to the digital assets ecosystem,” said Rep. Dusty Johnson (R-SD). “Without this bill, digital asset innovation will continue to be filled with uncertainty. Today’s victory gets us one step closer to establishing clear rules of the road for developers in the industry so America can remain a global hub for tech and finance innovation. I hope the Senate considers this bill soon so we can finalize this essential framework.”
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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