U.S. House of Representatives approves FIT21 bill in bipartisan vote for crypto market rules

The U.S. House of Representatives passed the FIT21 cryptocurrency market bill with bipartisan support today.

With 71 Democrats joining Republican members of the House, the Financial Innovation and Technology bill passed 279-136. The bill is one of the biggest to pass this year for the crypto, blockchain and Web3 markets. That bodes well for Web3 gaming companies who have raised a lot of venture capital in recent years.

The aim of the bill is to reshape the U.S.s digital asset regulations to support innovation while protecting consumers.

If passed by the U.S. Senate and signed by President Joe Biden, FIT21 would grant the U.S. Commodity Futures Trading Commission (CFTC) authority over digital assets deemed to be commodities, as well as creating legal domain for the Securities and Exchange Commission (SEC).

“This is a defining moment for the crypto industry,” said Sheila Warren, CEO of the Crypto Council for Innovation, in a statement.

The council said the vote represents years of effort from policymakers, their staff, and the industry to safeguard consumers and keep the U.S. at the forefront of digital innovation. 

Crypto companies and digital asset makers (including game companies) will have a framework for determining if their assets are securities under the terms defined by the bill. Such vagueness in the past led to a lot of litigation between government regulators and startups trying to move fast. The bill has a test on whether a project qualifies as a decentralized blockchain or not.

Aron Beierschmitt, CEO of Laguna Games (maker of Crypto Unicorns), said in an email to GamesBeat, “The passage of the FIT21 bill in the House marks a significant step forward for the U.S. crypto industry, with notably strong bipartisan support. This move indicates a growing recognition among lawmakers of the importance of establishing a clear regulatory framework for digital assets. While challenges remain, particularly in the Senate, this development highlights the increasing political will to integrate crypto into the mainstream financial system and underscores the industry’s potential to influence future elections and economic policies.”

He added, “Honestly, I think this is so much bigger than gaming so I focused on the impact of the bill more broadly. Web3 gaming will benefit directly from this as does the entire space.”

Rep. Ro Khanna (D-Calif.) in Silicon Valley argued that blockchain innovation should happen in the U.S.

In an email to GamesBeat, Kurt Watkins, founder of Watkins Legal, said, “It’s telling that in a hyper partisan environment and during an election year, that the House and the Senate with meaningful bipartisan support passed a law to nullify the SEC’s strepitous bulletin designed to exclude major financial players from crypto markets. Not a week later, the House, again with bipartisan support passed a law, that begins to recognize the unique features of crypto as a separate asset class. More telling still is that Biden has not threatened to veto this new legislation as he had previously. Hopefully, this signals the end of one man’s tyranny at the helm of the SEC and transitions the United States to a competent, balanced, and fair actor in the crypto space.”

David Hoppe, managing partner of Gamma Law, said in an email to GamesBeat, “Over the last two years we’ve seen an increasing number of blockchain games startups choosing to locate outside the United States and exclude US users, due to regulatory uncertainty and what has often appeared to be regulatory hostility.  Passage of FIT21 would go a long way toward addressing these barriers and encouraging innovation and responsible development of the blockchain games business in the United States, for the benefit of games companies and players.”

[Updated: 8:11 a.m. on 5/23/24 with new quotes]