US House Passes FIT21 Crypto Bill in Historic Bipartisan Vote Despite SEC Opposition

In what industry leaders call a watershed moment for digital asset regulation in the United States, the House of Representatives passed the Financial Innovation and Technology for the 21st Century Act, commonly known as FIT21, with a decisive 279-136 bipartisan vote on May 22, 2024. The legislation represents the most significant congressional effort to establish a comprehensive regulatory framework for cryptocurrencies, and its passage sends a clear signal that Capitol Hill is ready to move beyond enforcement-driven oversight.

TL;DR

• The US House passed the FIT21 Act with a 279-136 bipartisan vote on May 22, 2024
• The bill establishes a clear regulatory framework dividing oversight between the SEC and CFTC
• SEC Chair Gary Gensler publicly urged lawmakers to vote against the bill, calling it flawed
• A wave of Democratic support crossed party lines, signaling a political shift on crypto policy
• The bill now moves to the Senate, where its prospects remain uncertain

A Bill Years in the Making

The journey to FIT21 spans years of false starts and stalled negotiations. Sponsored by Representative Glenn Thompson of Pennsylvania and co-sponsored by a diverse bipartisan coalition, the legislation addresses a long-standing grievance from the crypto industry: the absence of a workable regulatory framework for digital assets in the United States.

At its core, FIT21 draws a dividing line between securities and commodities in the digital asset space. The bill grants the Commodity Futures Trading Commission primary oversight of digital assets that function as commodities, while preserving the Securities and Exchange Commission’s authority over assets that qualify as investment contracts. This dual-regulator approach aims to eliminate the jurisdictional gray zone that has frustrated both regulators and market participants for years.

SEC Chair Gensler Pushes Back

In a remarkable move, SEC Chair Gary Gensler publicly urged House members to vote against the legislation just hours before the vote. Gensler argued that the bill would create new regulatory gaps and undermine investor protections that have existed for decades in traditional financial markets. He warned that the proposed framework would make it easier for crypto projects to operate outside the scope of securities laws.

Despite Gensler’s objections, a significant number of Democrats joined Republicans in supporting the bill. The 279-136 tally included votes from lawmakers who have traditionally aligned with the SEC’s enforcement-heavy approach to crypto regulation. This bipartisan breakthrough suggests that political momentum on digital asset policy has shifted considerably.

What FIT21 Actually Does

The legislation introduces several key provisions that reshape how digital assets are regulated in the United States. First, it establishes a clear process for determining whether a digital asset qualifies as a security or a commodity, based on the degree of decentralization of the underlying blockchain network. Assets operating on sufficiently decentralized networks would fall under CFTC jurisdiction, while those controlled by identifiable issuers would remain under SEC oversight.

Second, the bill creates new consumer protection requirements for crypto exchanges and custodians, including mandatory disclosures, audit standards, and asset segregation rules. Third, it provides a pathway for previously issued digital assets to transition from SEC to CFTC jurisdiction as their networks become more decentralized over time.

Political Momentum Builds

The FIT21 vote did not happen in isolation. On the same day, the crypto industry watched as the SEC signaled a dramatic shift in its stance on spot Ethereum ETFs, with multiple reports indicating that regulators were preparing to approve several applications after months of pessimism. Additionally, the Senate had recently voted 60-38 to repeal the SEC’s controversial SAB 121 accounting guidance, which had imposed strict custody requirements on firms holding digital assets for clients.

These concurrent developments suggest a broader political realignment on cryptocurrency policy in Washington. Senate Majority Leader Chuck Schumer was among those who voted to repeal SAB 121, indicating that pro-crypto sentiment has reached the highest levels of congressional leadership.

Why This Matters

The passage of FIT21 through the House marks a turning point in the relationship between the US government and the cryptocurrency industry. For years, companies operating in the digital asset space have faced regulatory uncertainty, with the SEC relying primarily on enforcement actions rather than clear rulemaking. This legislation, if signed into law, would provide the regulatory clarity that institutional investors and major financial firms have demanded before committing significant capital to the sector.

However, the bill still faces significant hurdles in the Senate, where banking committee leadership has expressed skepticism about creating new regulatory frameworks for digital assets. Even if FIT21 stalls in the upper chamber, the House vote demonstrates that cryptocurrency has become a bipartisan political issue that lawmakers can no longer afford to ignore. Combined with the Ethereum ETF developments on the same day, May 22, 2024, may well be remembered as the day Washington finally took crypto regulation seriously.

Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. The regulatory landscape for digital assets is evolving rapidly, and readers should consult qualified professionals before making investment or compliance decisions.