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Proposed Legislation to Provide Greater Clarity for the Crypto Industry

House Financial Services Committee Chairman Patrick McHenry recently announced that new legislation, known as the Financial Innovation and Technology for the 21st Century (FIT21) Act, is on track for a potential House floor vote by the end of May. This legislation is aimed at offering clear regulatory frameworks for digital assets to address issues related to market oversight and consumer protection.

Addressing Regulatory Uncertainty

McHenry emphasized the importance of providing the digital asset ecosystem with much-needed clarity through this legislation. He highlighted how regulatory uncertainty has hindered innovation and left consumers vulnerable for too long.

The consideration process for FIT21 is scheduled for the week of May 20, with the House Committee on Rules to determine the bill’s fate. If passed in the House, FIT21 will proceed to the Senate and ultimately to the President for approval.

Clarification of Regulatory Jurisdiction

FIT21 seeks to distinguish between the regulatory jurisdictions of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) concerning cryptocurrencies. The legislation assigns the CFTC authority over crypto commodities and the SEC authority over crypto assets offered through investment contracts.

This distinction aims to provide clarity for crypto developers regarding fundraising activities and regulatory oversight. Additionally, FIT21 allows for the secondary market trading of crypto commodities initially offered in an investment contract.

Furthermore, the bill establishes rules for companies to register with the SEC and CFTC, outlining requirements related to customer disclosure, asset protection, and operational procedures.

The FIT21 Act was introduced in July 2023 by members of the House Committee on Agriculture, including Chairman Glenn Thompson and Representatives Tom Emmer, French Hill, Dusty Johnson, and Warren Davidson.

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By utilizing AI legalese decoder, stakeholders in the crypto industry can navigate the regulatory landscape more effectively, identify key provisions within the legislation, and anticipate the potential impact on their operations. This innovative solution can enhance transparency, compliance, and decision-making processes related to regulatory developments in the digital asset space.

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