US Congress to vote on bill to limit SEC in crypto regulation

Cryptocurrencies on decentralized blockchains will be regulated by the CFTC as commodities

21.05.2024 - 13:50

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What’s new? By the end of this month, the US House of Representatives will vote on the Financial Innovation and Technology for the 21st Century (FIT21) bill. It aims to set the regulatory framework for digital assets and split the authority to oversee the sector between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

Bill on the Congressional website

What else is known? According to the document, the CFTC will regulate decentralized digital assets as commodities. If a cryptocurrency-related blockchain is not decentralized, it will be recognized as a security and placed under SEC oversight.

The bill also establishes the concept of decentralization. A project may be deemed so if “no person has unilateral authority to control the blockchain or its usage, and no issuer or affiliated person has control of 20% or more of the digital asset or the voting power of the digital asset.”

In addition, the bill gives the CFTC exclusive regulatory authority over cash or spot markets for digital commodities, establishes requirements for primary and secondary market transactions, and explicitly limits the SEC’s jurisdiction.

If enacted, the law would require the CFTC and SEC to jointly develop rules and define industry-related terms.

US House of Representatives has approved a bill to support blockchain technologies

Authority to promote the sector will be given to the Secretary of Commerce

Last year, FIT21 was approved by the House Finance Committee. At the time, opponents of the document noted the risk of increased fraud due to the fact that the CFTC has a reputation for being a more lenient regulator towards cryptocurrencies compared to the SEC.

Late last year, CFTC Chairman Rostin Behnam recognized that there is competition between his agency and the SEC for control over the industry, and it creates difficulties in regulating digital assets.

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