House Democrats won’t be forced to vote against two pro-crypto bills
United States House of Representatives Democrats will not be forced to vote against two pro-crypto bills expected to come up for a floor vote this week — though they are strongly being urged to do so.
A May 20 email from Democrat Party leaders to House members shared by POLITICO shows the party did not urge members to vote no on the Republican-led Financial Innovation and Technology for the 21st Century (FIT21) Act and the CBDC Anti-Surveillance State Act — H.R. 4763 and H.R. 5403 respectively.
Both bills have been perceived as positive for the crypto industry if passed.
FIT21 would, among other clauses, firm up the process for classifying if a cryptocurrency is a commodity or security and mostly hand regulatory control of the sector to the Commodity Futures Trading Commission.
The U.S. crypto industry and lobbyists have supported the bill, with 60 companies urging the House to pass it in a May 16 letter.
The CBDC act on the other hand, will prevent the Federal Reserve from issuing a Central Bank Digital Currency (CBDC).
However, the email noted that Representatives Maxine Waters and David Scott “strongly oppose” FIT21 while Waters opposes the CBDC act.
POLITICO later obtained a letter from the pair urging a vote against FIT21.
“House Democratic leaders said today they will NOT whip against House Republicans’ crypto bill, I’m told,” POLITICO reporter Eleanor Mueller wrote on X referring to FIT21.
In the email, Democratic leaders took issue with parts of the bill, including its establishment of a process for trading digital commodities in the secondary market if “they were initially offered as part of investment contract securities” as defined by the Securities Exchange Commission using the Howey test.
“This language undermines decades of legal precedent and case law, thereby creating uncertainty in our traditional securities market,” the email said.
The leaders also argued the bill “weakens investor protections and opens the door to fraud and market manipulation” by giving a “safe harbor” where some entities can lodge an intent to register “effectively shielding” them from the SEC until it and the CFTC finalize crypto rules.
Related: Bipartisan bill for blockchain competitiveness passes US House
Meanwhile, the CBDC Anti-Surveillance State Act would stop the Federal Reserve from issuing a CBDC, including in pilot programs.
Democrat leaders argue that stopping CBDCs would hamper the “primacy of the U.S. dollar” as other countries looking to evade sanctions are moving ahead with their own CBDCs.
“According to the Congressional Budget Office (CBO), the bill’s overly broad definition of CBDC raises concerns the bill could undermine the Fed’s ability to conduct monetary policy,” the email said. “Particularly concerning as it attempts to navigate a soft landing in regard to inflation.”
Floor debate and passage of FIT21 is expected on Wednesday, May 22, according to POLITICO’s Mueller.
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