Understanding the FIT21 Bill: A New Driving Force for Regulation and Political Power Shift in the US Encryption Market.

Original author: Avichal - Electric ϟ Capital

Original compilation: Deep Tide TechFlow

The US House of Representatives is voting on FIT 21. Just now, Biden stated that he hopes to establish comprehensive cryptocurrency regulations. So,

• What is FIT 21?
• Why is this bill important?
• What insights does FIT 21 offer on changes in American political alliances and power?

What is FIT 21?

FIT 21 is the “21st Century Financial Innovation and Technology Act”, which is the first attempt to comprehensively define how the United States should regulate the encryption market.

FIT 21 has several key areas and clauses:

• Under the jurisdiction of the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC)
• Providing consumer protection around transparency and disclosure for initiators and endorsers.
• Institutions are prohibited from blocking people from using cryptocurrencies.
• Requires the Ministry of Finance to study stable coins.

FIT 21 attempts to define the terms surrounding decentralized systems and when a network is decentralized enough to no longer be considered a security. It introduces a process to verify if assets are decentralized enough and categorize them as commodities. This is a significant breakthrough.

The SEC must review the application and respond within 90 days. If the SEC determines that an asset is operating without a controlling entity, then the asset is considered a commodity and falls under the jurisdiction of the Commodity Futures Trading Commission.

For those who suspect the Securities and Exchange Commission in the United States, this is not ideal. But establishing clear rules is a big step forward.

So, why is FIT 21 important?

After three and a half years of hard work, I learned the first thing: progress in politics and legislation is often gradual and imperfect, but occasionally there can be major breakthroughs.

When you can turn something you want into real law, then accept it.

FIT 21 is not perfect, but it brings us closer. We not only win a new battle, but also gain extra points in this game. We have proven to the world that we know how to do things right. And we may not have such an opportunity for several years again.

FIT 21 does not have a corresponding bill in the Senate. Therefore, it will not become a law.

Today’s voting has a performative nature, but 80% of the authorities are just performing.

What insights does FIT 21 provide on changes in American political alliances and power?

But who is performing? For whom? What does their performance tell us? These performances will tell you where the world is heading.

This vote tells us:

• The Republican Party has been following this issue from the beginning.
• The Democratic Party is concerned about losing votes, funding, and losing to the Republican Party on this issue.
• The Democratic Party is breaking up with Elizabeth Warren
• The President is breaking up with Warren

The power center is shifting, cryptocurrencies are winning.

@PatrickMcHenry, @RepFrenchHill, @GOPMajorityWhip, and others have been advocating for cryptocurrency for many years. With the maturity of 50 million American cryptocurrency holders, they have been well prepared for power transfer, which is a great validation of their strategy.

If you look at who has changed their opinion in the past 6 months, it is the moderate Democrats. Similar to the Democrats who voted to overturn SAB 121, we now have people like Jim Himes and Ro Khanna who are voting with their Republican colleagues.

A year ago, this could have been swiftly vetoed by the president. Today, the White House hopes to help clarify cryptocurrency regulations and will not veto these regulations.

180° attitude U-turn. White House staff brought their colleagues here.

What does all this mean? What signal does it send?

• This indicates that the moderate Democratic Party has recognized the importance of cryptocurrency.
• There are plenty of people here to influence the choices.
• Having enough funds to assist in the election.
• The Democratic Party is losing these voters.

Elizabeth Warren used to be the focus of technology and cryptocurrency regulation. Due to her losing votes and donations for the party before 2024, she has lost a lot of power. The Democratic Party has now signaled that they do not want to be forgotten along with Warren.

In 2025, the Senate will appoint new commissioners in SEC, CFTC, FDA, FTC, etc. If Warren has the power, we can expect people like Gensler. If Warren doesn’t have the power, we will also have people like @HesterPeirce (Note: The author suggests that the influence of cryptocurrencies in the U.S. political arena will continue to deepen regardless).