Markets
3 Ways McHenry’s Crypto Markets Bill Will Change the Industry – DL News
- The House is expected to vote on the FIT Act later this week.
- It would be the first time that a standalone encryption bill would be voted on.
A version of this story appeared in our The guidance newsletter on May 20th. sign up here.
Republican Congressman Patrick McHenry’s landmark encryption bill, the FIT21 Lawis going to the House floor for a vote.
This is a big deal because it’s the first time a standalone encryption bill has been heard by the entire House.
According to McHenry, the FIT21 Act is prepared to bring much-needed clarity to the crypto industry.
However, not everyone is convinced. Democratic Representative Maxine Waters called is a “wish list of major cryptocurrencies and deserves none of our support.”
With the Securities and Exchange Commission on a fly-swatting mission – with the aim of ConsenSys, CoinbaseIt is Robinhood crypto business over alleged securities violations — McHenry’s bill couldn’t have come at a better time.
Three lessons for FIT
Here are the three main takeaways.
First, the law will clarify who should regulate encryption and how. If a network can prove that it is sufficiently decentralized, for example, it will fall under the purview of the Commodity Futures Trading Commission.
Join the community to receive our latest stories and updates
Otherwise, it would be turned over to SEC Chairman Gensler. According to FIT21, this would not be a bad thing because crypto companies would finally be able to legally launch and trade currencies.
This leads to the second main conclusion.
If passed, FIT21 would create a clear registration process for crypto companies to work with the SEC – something the industry says is too onerous at the moment.
Dan Gallagher, Robinhood’s chief legal, compliance and corporate affairs officer, said his team spent years trying to register with the SEC. The commission appears to be moving forward with enforcement action against Robinhood’s crypto business.
Finally, the third important conclusion: crypto investors will also benefit from FIT21.
The law would require crypto companies to provide disclosures about ownership and structure and would require exchanges to keep company and customer funds separate, a clear nod to the chaos that caused the FTX collapse.
Basically some transparency for anyone looking to do business with a crypto company.
What are the hypotheses?
But what is the probability of passing?
It has a strong chance of leaving the House, thanks to the Republicans’ general pro-crypto stance and majority in the lower house.
However, the Senate, with Democratic firebrand Elizabeth Warren leading the anti-cryptocurrency charge, will be a bigger obstacle.
However, cracks are appearing in Warren’s coalition — take a look at the 32 Democrats who crossed party lines to overturn regulatory guidelines which make maintaining cryptography an expensive and complicated endeavor for banks.
Liam Kelly is a DeFi correspondent at DL News. Have a tip? Email at liam@dlnews.com.