Here’s what could happen next

A bill that would clarify the role of U.S. commodity and commodity regulators in policing is headed for an uncertain future as it heads to the Senate before heading to President Joe Biden's desk.

The Republican-led Financial Innovation and Technology for the 21st Century Act (FIT21), or HR 4763, passed the U.S. House of Representatives on May 22 with 71 Democrats and 208 Republicans voting for 136 against.

Its future in the US Senate is unclear, as it has no companion bill and faces the nation's biggest crypto critic, Senator Elizabeth Warren. But on May 16, the Senate called to kill a bill that would have restricted banks and crypto firms from doing business.

It could still be months before the 100-member Senate considers FIT21, as there is no deadline for when senators must act.

Even if they do, the bill may be assigned to a committee for review, hearings, and observations. If it survives, a majority of 51 senators must vote for approval.

Parts of FIT21 are subject to change, with members of the House and Senate meeting to iron out differences in their versions of the bill. The bill will go back through Congress for final approval.

President Biden will have 10 days to sign or veto FIT21. But the administration said on May 22 that it would oppose the passage of the bill, but did not say it would be rejected.

Even if Biden approves FIT21, the House and Senate can override it with at least a two-thirds vote on both sides.

Industry is happy to pass

US Securities and Exchange Commission (SEC) Chairman Gary Gensler publicly opposed FIT21 on May 22, saying it would “create new regulatory loopholes” and threaten capital market stability. Its success in the House of Representatives is seen by many as an early victory for crypto.

Coinbase CEO Brian Armstrong described the bill's passage — with 71 Democrats sidelined — as a “total victory” and a victory for “clear crypto regulations.”

“This is an overwhelming majority of elected Democrats who have voted ‘no confidence' in the current SEC,” said Jake Chervinsky, chief legal officer at Variant Fund.

However, crypto-focused attorney Gabriel Shapiro threw cold water on the party, arguing on X that FIT21 still gives the SEC “enormous power.”

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“It provides a bifurcated regulatory system between the SEC and the CFTC,” he added. “It does this by giving the CFTC a power it never had — regulatory authority over the spot products market.”

FIT21 largely defers crypto regulation to the Commodity Futures Trading Commission (CFTC), which the industry sees as a more relaxed regulator than its securities regulatory counterpart.

The SEC, however, will have regulatory authority over cryptocurrencies as they are decentralized enough, while FIT21 creates a way for cryptocurrencies to be traded as commodities.

Magazine: Legislators' fear and skepticism fuel proposed crypto regulations in the US.