Biden Administration Announces Opposition To FIT21

President Joe Biden’s administration will oppose the passage of Financial Innovation and Technology for the 21st Century Act (FIT21) amidst its vote in the House of Representatives, a Wednesday statement from the White House claims.

President Joe Biden To Oppose FIT21 Amid Vote

The White House statement says that FIT21 “lacks sufficient protections for consumers and investors who engage in certain digital asset transactions,” but stops short of vetoing the legislation altogether.

“The Administration is eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, which will promote the responsible development of digital assets and payment innovation and help reinforce United States leadership in the global financial system,” the statement continues.

The Biden administration’s statement comes just as the House of Representatives are scheduled to vote on whether or not to advance the key piece of crypto regulation widely supported by the blockchain sector.

If passed, FIT21 would allot greater freedoms to U.S. crypto operators and delegate increased regulatory responsibility of digital assets towards the Commodity Futures Trading Commission (CFTC).

Meanwhile, critics argue that the passage of FIT21 could cause market instability and negate already established securities law.

SEC Chair Gary Gensler Pushes Back On Crypto Regulation Bill

On Wednesday morning, United States Securities and Exchange Commission Chair Gary Gensler released his own statement criticizing the bill, claiming it would put “investors and capital markets at immeasurable risk.”

“The crypto industry’s record of failures, frauds, and bankruptcies is not because we don’t have rules or because the rules are unclear,” Gensler wrote. “It’s because many players in the crypto industry don’t play by the rules.”

Both Gensler and the Biden administration have been criticized for their stringent regulatory-focused approach to digital assets, with the SEC filing litigation against several major crypto organizations in the past several years alone.

However, new momentum around a handful of crypto-related legislation on Capitol Hill could spell the beginning of the end for the SEC’s regulation-by-enforcement approach altogether.

The White House's statement this morning recognizing the need for comprehensive crypto legislation to promote innovation and reinforce U.S. leadership, and its expressed eagerness to work with Congress to get it done, is remarkable and encouraging. Glad to see us finally moving… pic.twitter.com/KFvwt5Ow8v

— TuongVy Le 🍎🗽🚕 (@TuongvyLe12) May 22, 2024

Just last week, both chambers of Congress passed a bipartisan resolution that would overturn the federal agency’s controversial staff accounting bulletin SAB121, despite Biden having released a statement saying he would veto it.

Meanwhile, Republican presidential frontrunner Donald Trump announced has seemingly embraced cryptocurrency, with his campaign beginning to accept donations in crypto as of Tuesday.

Alexander Grieve, Paradigm’s lead on government affairs, noted a shift in the White House’s tone towards digital assets between the Biden administration’s recent veto announcement and Wednesday’s statement on FIT21, calling it “a huge course correction.”

Despite U.S. lawmakers’ efforts, only time will tell whether or not common-sense crypto regulation will be passed anytime soon.