What is the FIT21 cryptocurrency bill -why is it so important

Source: TAXDAO

On May 22, 2024, the US House of Representatives approved an important encryption bill called the 21st Century Financial Innovation and Technical Act (FIT21), which marked an important step in the United States’ clarity of the supervision of the encryption industry.The FIT21 Act aims to clearly define cryptocurrencies and classify specific cryptocurrencies to determine whether it is securities or commodities, and determine which government agency to supervise it.该加密法案提案接下来将被送交美国参议院投票。

FIT21 加密货币法案是什么？让我们来一探究竟。

1.关于《21世纪金融创新与技术法案》（FIT21）

The FIT21 Act is a consumer protection bill designed to establish a digital asset supervision framework.

The bill aims to protect consumers, while ensuring that encrypted innovators will not be prosecuted by the US Securities and Exchange Commission (SEC) and the Commodity Futures Commission (CFTC) due to “lack of clear rules”.

The committee stated: “Fit21 provides a strong and long -tested consumer protection and necessary regulatory certainty, which is essential for digital asset innovation in the United States.”

The bill will introduce “decentralization tests” to determine whether cryptocurrencies are securities or commodities.SEC will regulate digital asset securities, while CFTC will regulate digital asset products.

The FIT21 Act is the result of the joint efforts of the House of Representatives Financial Services Committee and the House Agricultural Committee. The bill was first submitted to the US House of Representatives for the first time in July 2023.

On May 21, 2024, when the US Congress, French Hill, attended the meeting at the House of Representatives, pointed out, “If there are no clear rules, we will continue to see the SEC implementation of the ‘law enforcement supervision’ agenda, which makes market participants worry that if they continue in the United StatesOperation, they will face litigation at any time.

2. What is the function of the Fit21 bill?

The FIT21 Act is designed to achieve the following four key goals:

Consumer protection requirements -the bill aims to implement strict consumer protection for encrypted service providers, including information disclosure, capital isolation, capital regulations, and higher custody standards.

Defining the scope of CFTC and SEC -the bill will clearly define whether cryptocurrencies are securities or commodities, which allows CFTC to regulate encrypted goods and give SEC’s supervision power of crypto securities.

Allowing encryption projects from centralization to decentralization -the bill will allow cryptocurrencies to decentralize over time and become a product.
Supporting the innovation of the United States -the bill will provide clear regulatory regulations for the digital asset ecosystem, so that cryptocurrency companies and startups can innovate without worrying about the lawsuit.

3. Decentralization test of Fit21 -encrypted securities or encryption products?

The following is how the FIT21 Act will determine that cryptocurrencies have been decentralized enough to be classified as a product: “Except for other requirements, if no one has the power to control or use the blockchain, and there is no publisher or associationIf a person controls the voting right of 20%or more digital assets, the bill will classify the blockchain as decentralized.

In an interview, Bankless Podcast said that the “decentralized test” of the FIT21 Act has “continuously improved through a lot of feedback.”MCHenry added that decentralized testing is a “very clear test” that allows encrypted projects to determine whether the tokens they issue are classified as securities or products.

In addition, MChenry said that the concept of centralization and decentralization is a “extensive range”, and the degree of decentralization of Bitcoin (BTC) is at the end of the scope.Regarding Ethereum (ETH), McHenry showed that Ethereum “obviously” passed the decentralized test of FIT21 to make it a encrypted product.

4. SEC’s response to Fit21

Although you may think this is the safest forecast in the cryptocurrency field, Gary Gensler, chairman of the US Securities and Exchange Commission, does not like the FIT21 bill.

On May 22, 2024, Gensler violently criticized the proposal in a blog, saying that the FIT21 Act may cause new regulatory loopholes and make investors and capital market risks.Gensler added that the decentralized test of the FIT21 Act abandon the “HOWEY Test of the Supreme Court for a long time” and allows the self -certification of encryption projects to be “decentralized” to evade SEC’s supervision.

He also said that the US Securities and Exchange Commission will not have enough people to handle more than 16,000 digital product certification requests that exist in more than 16,000 cryptocarnically assets.

“If the perpetrators and low -priced stock salespersons that raise the shipping plan are labeling or self -proved that they are decentralized systems by labeling to themselves to argue that they are not restricted by securities law?证券交易委员会只有60天的时间来质疑他们的自我认证，”Gensler指出。