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Cryptocurrency bill passes House with broad bipartisan support in historic vote
Representative Patrick McHenry, Republican of North Carolina and ranking member of the House Financial Services Committee, and Representative Maxine Waters, Democrat of California and chair of the House Financial Services Committee, spoke in the House respectively to for and against the FIT21 bill. , which would establish jurisdiction between the Commodity Futures Trading Commission and the Securities and Exchange Commission over cryptocurrencies. Photographer: Al Drago/Bloomberg
Al Drago/Bloomberg
WASHINGTON – A bill that aims to establish a regulatory regime for cryptocurrency it passed the House by a wide margin, opening debate in the Democratic-controlled Senate.
The bill primarily establishes criteria by which to determine whether the Securities and Exchange Commission or the Commodity Futures Trading Commission should supervise particular crypto assets.
“Unfortunately, our current regulatory framework is preventing digital asset innovation from reaching its full potential,” said Rep. Patrick McHenry, R-N.C., chairman of the House Financial Services Committee and one of the sponsors of the bill. “The SEC and CFTC are currently engaged in a food fight for control over this asset class. They have created an impossible situation in which the same companies are subject to competing and contradictory enforcement actions by the two different agencies.”
Crucially for banks, the bill prohibits the SEC from creating rules that prevent banks from storing cryptocurrency assets. The industry claims the SEC did so when it issued Staff Accounting Bulletin 121, which required companies holding cryptocurrencies in custody to record them as liabilities on their balance sheets.
The bill passed the House by a vote of 279-136, with 71 Democratic lawmakers voting in favor of the legislation. Those lawmakers included Rep. Nancy Pelosi, D-California, the former House speaker.
The vote represents a shift in how Capitol Hill views cryptocurrency legislation. Other Democratic lawmakers are favorably considering establishing a cryptocurrency regulatory regime, particularly those in New York, the Northeast and California.
Earlier in the day, the White House said in a policy statement that it opposed the bill. However, cryptocurrency advocates took this as a victory, as the Administration’s language was considerably softer than that a statement released earlier this month on a Congressional Review Act resolution challenging SAB 121and the White House has not promised to veto the bill.
However, the bill must pass through the Democratic-controlled Senate before it can potentially land on President Joe Biden’s desk. And most Democrats, including Rep. Maxine Waters, D-California, ranking member of the House Finance Committee, still oppose it.
Many Democratic representatives argued on the House floor that the bill contains a section added earlier this month — without committee debate — that would give not only cryptocurrency companies, but other more traditional financial instruments a regulatory arbitrage loophole.
“Language was added to the bill after it was flagged by the jurisdiction committees to also allow some traditional titles to exist in this regulatory no man’s land as well,” Waters said. “
Waters referenced Title Two of the bill, which defines the term “contractual investment asset.”
“Assets that fall under this definition are explicitly considered non-securities, and therefore not under the purview of the SEC, but the bill does not provide an alternative legal framework for these assets,” he said.
Republican supporters of the bill said on the House floor that this interpretation is misleading.
“The minority has also repeatedly charged that somehow a great securities loophole has been offered and opened in this bill,” said Rep. French Hill, R-Ark. “This is simply not true; it is not a factual statement.”
He said the bill specifically states that the term “digital assets” does not include assets such as banknotes, stocks and Treasury securities.
“So it doesn’t open the loophole that makes the ranking member of the Financial Services Committee pay,” he said.