The Financial Innovation and Technology for the 21st Century Act is a 212-page bill introduced by House Republicans. According to House Agriculture Committee Chairman Glenn Thompson (R-PA), the legislation aims to create a comprehensive regulatory framework for digital assets, which supporters say is urgently needed to provide clarity and oversight for the cryptocurrency industry. Thompson described the bill as a major milestone in establishing clear regulations for the digital asset space.
The proposed bill puts forth new definitions covering digital assets and outlines exemptions for certain cryptocurrencies. It also establishes a process for digital asset intermediaries, such as crypto exchanges, to register with both the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC). This dual oversight framework aims to provide regulatory clarity on whether specific digital assets should be considered securities or commodities. By laying out registration requirements, the legislation seeks to bring cryptocurrency platforms under clearer regulatory supervision.
A key component of the legislation is creating a process for blockchains to be certified as decentralized by regulators. It would allow token issuers to assert that their project meets the decentralized standard outlined in the bill while giving the SEC a chance to challenge that claim if warranted.
The bill also establishes new disclosure requirements for digital asset issuers. They would need to provide extensive information about their project’s economics, development roadmap, risk factors, and source code. This disclosure regime aims to give regulators and investors more transparency into cryptocurrency projects seeking decentralized status. Overall, the goal is to develop clearer criteria and oversight around which blockchain networks qualify as sufficiently decentralized.
The proposed legislation would update US securities laws to require the SEC to consider innovation as a factor when creating new regulations. Under the bill, digital commodities including Bitcoin and payment-focused stablecoins would be excluded from the definition of a security.
Representative French Hill (R-AR), a lead sponsor, described the bill as landmark legislation that aims to both protect consumers and encourage US-based crypto innovation.
While the SEC would have oversight authority regarding the use of payment stablecoins on registered trading platforms, the bill does not provide the SEC direct control over the design, structure or operation of stablecoin currencies themselves. The goal is to balance consumer protection with still allowing space for crypto innovation to flourish.
Under the proposed legislation, companies seeking to register as broker-dealers or alternative trading systems with the SEC for the purpose of intermediating digital asset trades would be subject to inspection by the agency.
According to a fact sheet from the House Agriculture Committee, Congress must take action to close the regulatory gaps that currently exist between the SEC and CFTC regarding digital assets. The memo stated that current securities laws do not properly account for the unique attributes of cryptocurrencies and related digital assets. The goal of the bill is to modernize regulations so they are tailored for the crypto industry rather than relying on outdated frameworks.
