TL;DR Breakdown
- FIT21 aims to establish a comprehensive crypto regulatory framework led by the CFTC.
- TD Cowen predicts FIT21 will not pass in this Congress due to significant hurdles.
- Future crypto legislation, expected around 2025/2026, will build on FIT21’s foundational efforts.
The US House of Representatives is slated to vote on the Financial Innovation and Technology Act for the 21st Century (FIT21) by the end of this month. The Republican-led bill seeks to establish a comprehensive regulatory framework for the burgeoning crypto market, with the Commodity Futures Trading Commission (CFTC) set to play a central role in oversight.
Despite the bill’s ambitious scope, TD Cowen, a leading investment bank, has indicated that FIT21 needs to overcome considerable hurdles in the current legislative session. According to a memo from TD Cowen’s Washington Research Group, there is virtually no chance for the bill to become law in this Congress, citing a lack of preparatory work by the Senate Banking Committee and a Democratic focus on stringent investor protection.
Future Prospects and Bipartisan Efforts
Despite the unlikely passage of FIT21 in the current session, the bill is viewed as a foundational element for future legislative initiatives targeting the crypto sector, expected around 2025/2026. The ongoing legislative process, including this upcoming vote, will importantly illuminate the bipartisan stance on critical issues such as anti-money laundering measures and the protection of investors.
TD Cowen anticipates the bill will pass in the House, highlighting a potential shift towards a more regulated crypto environment.
House Financial Services Committee Chairman Patrick McHenry has endorsed FIT21 as a bipartisan effort to clarify the regulatory landscape for cryptocurrencies. This comes amidst varied political endorsements of crypto, including recent pro-crypto comments from former President Donald Trump, whose future stance remains uncertain as he contemplates a return to politics.
As the vote approaches, the crypto industry and regulatory bodies alike await the outcomes that will shape the legislative framework for cryptocurrencies in the US, setting the stage for future debates and developments in this rapidly evolving sector.
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