Over 60 organisations, including multiple associations, developers, start-ups, and the largest digital assets firms, have signed a letter of support for the ‘Financial Innovation and Technology for the 21st Century Act’ (FIT 21), which looks to protect American consumers, drive growth, foster financial inclusion, and mitigate risks to national security.
This news indicates the first time the digital asset industry has come together at this scale to support a bill establishing a comprehensive federal regulatory framework. The letter follows years of calls for regulatory clarity and appropriate guardrails for consumers and investors, and it urges Members of the House to vote in favour of FIT 21.
FIT 21 proposes to establish a regulatory framework for the issuance and trading of digital assets by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
The act would clarify which agency will regulate which digital assets. In the letter signed by 59 organisations, they explain how the legislation could help accelerate the growth of blockchain technology and digital assets, foster financial inclusion and help better protect national security.
Sheila Warren, CEO of the Crypto Council for Innovation (CCI), commented: “At a scale not seen before, CCI brought together the broader digital assets community, including other associations, start-ups, and the largest firms in our industry, in support of FIT21.”
Driving innovation in the US
The CCI argues that other major economies including the European Union, United Kingdom, Singapore, Japan, South Korea, the UAE, Brazil, and Australia, have all made significant progress when it comes to developing a regulatory framework for digital assets.
The US, on the other hand, have failed to keep up – meaning the threat of American innovators ditching the region for a more regulatory-friendly country is increasing. In fact, the CCI says that American investors and consumers may turn to unregulated offshore markets, which poses risks to national security and the economy.
While the benefits of the new act appear clear, the CCI recognises within the letter that FIT 21 would result in a new compliance challenge for digital asset firms. Despite this, it says that regulatory clarity is ‘indisputably more responsible’ and is much safer for consumers.
FIT 21 includes important consumer protections, such as segregating customer funds, requiring risk disclosures, extending bankruptcy protections, imposing minimum capital requirements, and addressing conflicts of interest.
The CCI explains that US-based digital asset firms currently have to comply with securities laws that do no take recent technological advancements into account – meaning updated legislation would not only be beneficial but is crucial if the sector can advance at all in the region.
