Yesterday, the US House of Representatives voted in favor of the long-awaited Decentralization Bill, officially called the “Financial and Technological Innovation for the 21st Century Act” (FIT21), a law that experts believe will provide regulatory clarity and make the crypto sector easier to understand for traders and investors. Within the United States.
The US decentralization bill provides some clarity for blockchain projects
The US Decentralization Bill (HR 4763) was voted on on the House floor yesterday evening, and although it may face major challenges in the Senate and may be blocked by presidential veto, these efforts represent the most important stage in establishing a comprehensive regulatory framework for digital assets within... United State.
The regulatory principle of the draft law is based on clearly defining the regulatory responsibilities assigned to the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) for the purpose of regulating transactions related to the crypto sector. The division of responsibilities depends on several factors, the most important of which is decentralization and the mechanism of operation of assets associated with blockchain systems, in addition to how they are owned and whose owners are defined. These factors determine whether digital assets can be classified as “restricted digital assets” subject to SEC rules or “digital goods” under the jurisdiction of the CFTC.
The FIT21 law also aims to regulate digital assets from their inception and before the existence of a functional system, and disclosure models similar to those used by the SEC will be applied to some transactions such as initial coin offerings (ICOs), which will allow potential buyers to obtain statements through which they can evaluate crypto projects.
The Blockchain Association had urged a full vote in the House of Representatives on the US decentralization bill in a letter addressed to Speaker Mike Johnson and Minority Leader Hakeem Jeffries on May 20.
The letter, signed by prominent companies operating in the crypto sector - such as Ripple, Circle, and Kraken - stressed the urgent need for legislation that provides a framework for innovation and regulatory clarity for American companies operating in the sector, in addition to protecting users and consumers.
“We, the undersigned, write today to express our support for a vote on H.R. 4763 for the Financial Innovation and Technology for the 21st Century (FIT21) Act,” the letter read.
“The undersigned represent the diverse blockchain and digital asset industry, including technology startups, small business services companies, technology infrastructure providers, regulated institutions and investors; “And who work together to support a national policy and regulatory framework that encourages innovation.”
Decentralization draft law
The decentralization bill ensures the issuance of licenses by the SEC
In addition to dividing regulatory responsibilities, the draft decentralization law sets out a licensing process for blockchain systems so they can be treated as decentralized entities. Once licensed, digital assets become “digital goods” and are not subject to the Securities and Exchange Commission (SEC) regulations; The regulatory framework then transitions to the Standards of Conduct of the Commodity Futures Trading Commission (CFTC). As digital goods, non-insiders can freely trade digital assets via CFTC-regulated digital goods trading platforms and through CFTC-regulated instant transactions. In turn, insiders will also gain more flexibility when transacting in digital goods, although some restrictions may still apply to specific insiders, such as asset issuers.
After the FIT21 bill was passed yesterday, it is expected to provide the necessary clarity to the laws regulating the crypto sector within the United States. Note that the SEC applies laws without issuing clear guidelines, which has caused a state of uncertainty and confusion in the sector. This oversight committee has been involved in disputes with all major players in the country's crypto sector, alleging the existence of unlicensed activities and unregistered offers of assets that could be considered securities. For example, the SEC filed a lawsuit against Coinbase in June 2023 for allegedly operating as an unlicensed entity to conduct securities trading, brokerage, and settlement activities. In turn, the platform filed a lawsuit against the SEC, accusing it of refraining from setting clear laws for digital currencies due to its arbitrary campaigns against crypto companies, which prompted Coinbase Chief Legal Officer Paul Grewal to rally the major trading platforms to stand together against the SEC’s actions that might cause... With serious repercussions for the entire sector.
