House Democrats Challenge Bill on Digital Asset Regulation

• Maxine Waters and David Scott have opposed the FIT21 crypto bill.
• The lawmakers emailed their colleagues to explain their reason for opposing the bill.
• They believe FIT21 will shield crypto entities from‌ securities laws, rules, and regulations.

Two senior House Democrats, Representatives Maxine Waters and David Scott, have voiced opposition to the Financial Innovation and Technology for the 21st Century Act (FIT21). In emails to fellow Democrats, they expressed concerns that the bill could disrupt existing regulations and weaken investor protections. However, a report by Politico noted they did not whip their members against the bill.

The FIT21 Act aims to establish a regulatory framework for digital assets by clarifying how these assets are classified and overseen. It proposes expanding the authority of the Commodity Futures Trading Commission (CFTC) in regulating certain digital assets.

However, Reps. Waters and Scott argue that the bill undermines established legal principles and creates uncertainty within the traditional securities market. A portion of their email states:

“This language undermines decades of legal precedent and case law, creating uncertainty in our traditional securities market.”

The lawmakers further point to a section of the bill that allows entities to file an “intent to register” under specific conditions. They believe this could shield such entities from existing securities regulations while the SEC and CFTC develop new rules.

According to the email, the ranking lawmakers fear that the new bill will weaken investor protection and open the door to fraud and market manipulation. They consider it a “not fit for purpose act.”

Proponents of the bill, including a coalition of industry organizations and companies such as Coinbase and Andreessen Horowitz, argue that FIT21 provides much-needed regulatory clarity for the digital asset industry.