The House of Representatives voted to pass two bills that, if signed into law, would significantly alter the regulatory landscape for digital assets in the U.S. This is a major victory for the crypto industry, which sees it as a strong step toward achieving the regulatory clarity it has been seeking in recent years but has been stymied by regulators.
The Financial Innovation and Technology for the 21st Century Act, which passed 279-136, would establish guidelines for which tokens are securities and commodities and create boundaries for the Securities and Exchange Commission and the Commodity Futures Trading Commission in their work to regulate the industry. The Central Bank Digital Currency Anti-Surveillance State Act, which would prevent the Federal Reserve from creating a CBDC, passed 216-192. The latter bill is largely viewed as preemptive as Federal Reserve Chair Jerome Powell has indicated that he will only issue a CBDC with congressional approval first, including in past congressional testimony. However, a future chair could take a different view, and this legislation would now tie their hands.
What was especially interesting about the measures is the relatively strong bipartisan support FIT21 attracted. Notable votes backing FIT21 include former House Speaker Nancy Pelosi (D-Calif.) and House Minority Whip Katherine Clark (D-Mass.). A majority of House Democrats still voted against the bill. There was bipartisan backing in the committee markup for the bill. However, the floor vote suggests that rank-and-file members may be more supportive of further crypto legislation, even if some Democratic leaders are skeptical.
House Democratic leadership did not whip for or against FIT21, but House Financial Services Committee Ranking Member Maxine Waters (D-Calif.) and House Agriculture Committee David Scott (D-Ga.) were both on the record opposing the measure. Before the vote, the White House and SEC Chair Gary Gensler put out statements also voicing their opposition to the bill. However, significantly, the White House stopped short of a veto threat and expressed an interest in “continued collaboration with Congress on developing legislation for digital assets.” Waters, Scott, and House Minority Leader Hakeem Jeffries (D-N.Y.) all voted against the legislation.
Unfortunately for the crypto industry, despite bipartisan support for FIT21, both measures face an uphill battle in the Senate. The upper chamber has shown less interest in legislation to address the regulatory questions addressed in the House-passed bills, instead focusing on digital assets’ connections to illicit finance. Passing the proposals in the House does put some pressure on the Senate to act. However, with an election less than six months away, expectations are low for what Congress will achieve for the rest of the year, which will likely mean that the measures languish in the Senate.
Notably absent from this set of House votes is the stablecoin legislation that House Financial Services Committee Chair Patrick McHenry (R-N.C.) has been working on with Waters. Rather than being a bad sign for its odds of passing, its exclusion is more likely a positive as it suggests that McHenry and Waters are still looking to craft a proposal that can have both of their support. If Congress is going to pass a meaningful crypto bill this year, stablecoin regulation is most likely, and the Senate has shown some interest in this topic with a recent bill mirroring the House proposal from Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.). Still, there is time pressure for a deal to be struck that can give Congress time to consider and pass the new text.
If an agreement between McHenry and Waters remains elusive, the stablecoin measure will still likely receive a House floor vote, likely before the August recess. However, this timing could slip if the lawmakers feel like there is progress in the talks and want to give themselves until the fall to have a chance for a compromise. There appears to be genuine interest in creating a bipartisan measure with buy-in from House, Senate, and executive branch leadership. However, the timing of this bill may make finding a path to passage more difficult than it would be outside of an election year. Asked in a recent Politico Pro interview, McHenry, who is retiring at the end of the year, offered no update on the status of the legislation.
With these measures passed in the House, they become starting points for future crypto legislation led by Republican majorities. If the GOP retains control of the lower chamber, who succeeds McHenry as chair of the House Financial Services Committee, it will be significant in determining how high of a priority this is. However, even if the bills are again passed and sent back to a Republican-controlled Senate, passing them may not be easy with the need to reach 60 votes in the Senate and Republicans likely having no more than 52 or 53 seats. There is a clear interest in legislating rules for digital assets, but passing bills that address market structure is likely a bridge too far for the moment, with issues like stablecoins representing an easier, though still not simple, topic to tackle. If not done this year, stablecoin regulation will likely continue to have the best chance of passage, particularly if Republicans have unified control of the White House, House, and Senate in 2025.