US House Passes FIT21 Act, Second Crypto-Focused Legislation This Month

According to Blockworks, the US House of Representatives has passed the Financial Innovation and Technology for the 21st Century Act, also known as the FIT21 Act. This marks the second crypto-focused legislation to advance in Congress this month. The bill was passed with a vote of 279-136, with 71 Democrats voting in favor. Three amendments to the bill were considered, proposed by Reps. Greg Casar, D-Tex., Brittany Pettersen, D-Col., and Ralph Norman, R-S.C. Casar's amendment aimed to reduce the crowd fundraising limit for crypto entities from $75 million to $5 million, but it did not pass. However, the amendments proposed by Reps. Pettersen and Norman were advanced. Norman's amendment calls for the Treasury Department, the CFTC, and the Securities and Exchange Commission to conduct a joint study and submit a report to Congress identifying any digital asset businesses owned by 'governments of foreign adversaries.' This amendment was inspired by China's involvement in Prometheum, the first crypto firm to receive a special purpose broker-dealer license from the SEC in 2023. Pettersen's amendment expands the Bank Secrecy Act to include digital asset entities under the definition of a 'financial institution.' It also orders a study to assess risks posed by centralized intermediaries in areas where anti-money laundering enforcement is not as robust. Pettersen stated that this amendment, along with the underlying bill, will provide more oversight into the digital asset market and support regulators' work to protect consumers and investors. The FIT21 Act now moves to the Senate. However, the White House has expressed opposition to the legislation, claiming it lacks sufficient protections for consumers and investors who engage in certain digital asset transactions. The May 22 notice did not explicitly state that President Joe Biden would veto the measure should it reach his desk. This comment follows the White House's recent statement that it would block Joint Resolution 109, which seeks to overturn the SEC's Staff Accounting Bulletin (SAB) 121. The Resolution advanced to the president's desk last week after earning bipartisan support in both the House and Senate.