Many of you may not remember that last July I introduced to you that the U.S. House Financial Services Committee approved the Republican-led cryptocurrency regulatory framework bill. This framework bill is actually the current FIT21, and its main function is to distinguish the regulatory responsibilities of cryptocurrencies under the SEC and CFTC.

FIT21 was proposed in Congress and passed by the U.S. House of Representatives. Its purpose is to clarify the roles of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in digital asset regulation. The bill also aims to provide stronger consumer protection, including disclosure of digital assets, fund segregation, capital allocation, and higher custody standards. However, the bill still needs to be passed by the U.S. Senate before it can take effect.

First of all, the full name of FIT21 is

H.R.4763 - Financial Innovation and Technology for the 21st Century Act (HR4763 - 21st Century Financial Innovation and Technology Act)

The main content is

If the blockchain or digital ledger on which the digital asset relies is fully functional and decentralized, then the Commodity Futures Trading Commission (CFTC) must regulate the digital asset as a commodity. The bill classifies a blockchain as a decentralized blockchain if, among other requirements, no person has unilateral control over the blockchain or its use and no issuer or affiliate controls 20% or more of the digital assets or voting power in the digital assets. In addition, the bill gives the CFTC exclusive regulatory authority over the cash or spot market for digital commodities.

If the relevant blockchain is functional but not decentralized, the U.S. Securities and Exchange Commission (SEC) must regulate digital assets as securities. However, the bill provides certain exceptions to the SEC's regulation of digital assets, which limit annual sales, restrict access to non-accredited investors, and meet disclosure and compliance requirements. The bill also imposes requirements for primary and secondary market transactions.

The CFTC and SEC must jointly issue rules to define terms and exempt dual-registered exchanges from duplication of rules.

More about FIT21

Address: congress.gov