Bill Hulse Bill Hulse
Senior Vice President, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce


May 17, 2024


What Happened: The U.S. House of Representatives will vote on landmark bipartisan legislation to clarify the regulation of digital assets. The Financial Innovation and Technology for the 21st Century Act (or “FIT 21”) seeks to provide a comprehensive framework for regulating digital assets markets.

Our View: The Chamber released a report in 2021 calling for updates to our financial regulatory framework given the unique characteristics of digital assets. Policymakers must move quickly to address market developments. Regulatory uncertainty is driving innovators out of the U.S.

Why does it Matter? Consumer protections applicable to digital assets are not clear. And, companies striving to comply with the law have been left in a regulatory limbo. Are they required to follow rules administered by the Commodity Futures Trading Commission (CFTC)? Or rules from the Securities and Exchange Commission (SEC)?

Security or Commodity? “Digital assets” refer to an asset issued or transferred using distributed-ledger technology, such as blockchain, rather than in physical or tangible form. In the U.S., securities are regulated by the SEC and commodities are regulated by the CFTC. There has been confusion – and outright disagreement – about whether many digital assets are a “security”, or a “commodity” given their different structures, economics, rights, and uses.

Why FIT 21? The legislation seeks to clarify the boundaries of the SEC’s and CFTC’s respective authorities. FIT 21 stands to improve consumer protection by empowering these agencies with a specific directive from Congress on how to police the market for digital assets.

FIT 21 uses a novel approach – based on whether the blockchain or digital ledger is part of a “decentralized network” – to clarify if a digital asset is a security subject to SEC’s rules, or a commodity subject to CFTC’s rules. This approach is in line with a recommendation made by the Chamber in our 2021 report.

FIT 21 embeds important protections that consumers would expect when transacting in other financial instruments. The legislation requires companies offering or selling digital asset to disclose information including material risks associated with the digital asset. Importantly, the legislation requires customer funds to be segregated. It also prohibits comingling them with the funds of the business and addresses conflicts of interest.

Bipartisan Effort: The sponsors of FIT 21 have patiently worked across the aisle to garner bipartisan support for the legislation. The bill has 8 Republican and 3 Democrat cosponsors. The legislation earned the support of six Democrats when it was considered by the House Financial Services.

What’s Next: FIT 21 will be placed on the Senate Calendar after being reported by the House.

About the authors

Bill Hulse

Bill Hulse

Hulse oversees the day-to-day efforts of CCMC including policy development, advocacy, and communications.

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