By Chris Matthews
71 Democrats voted for the bill, which faces long odds in the Senate.
The House of Representatives passed landmark cryptocurrency legislation on Wednesday with strong bipartisan support, signaling a potential sea change in Washington's attitude toward the digital asset sector.
The House voted to approve the Financial Technology and Innovation Act for the 21st Century by 279 votes to 136, with almost unanimous support from Republicans and 71 Democrats who voted in favor of the bill.
The law would create a customized registration and disclosure regime for digital asset companies and give primary responsibility for regulating the industry to the Commodity Futures Trading Commission at the expense of the Securities and Exchange Commission.
The digital asset sector has long complained that the SEC's insistence that these companies conform to traditional disclosure regimes is unworkable.
The bill faces many difficulties in the Senate, where several lawmakers have crafted their own bills to overhaul cryptocurrency regulations.
"The Senate typically doesn't take House bills and simply vote on them. It does its own thing," wrote a financial services analyst at Capital Alpha Partners, in a client note Wednesday. "So while the Senate might eventually be interested in considering some type of cryptocurrency legislation, it almost certainly won't be this one."
SEC Chairman Gary Gensler came out strongly against the bill in a public statement Wednesday morning, a rare example of a major financial regulator trying to publicly influence Congress.
The legislation would "create new regulatory loopholes and undermine decades of precedent...putting investors and capital markets at immeasurable risk," he said.
Gensler also argued that the law would give scammers a way to avoid securities laws by cynically claiming that their products are crypto assets.
The industry, however, applauded a statement from the Biden administration, which said that while it does not support the FIT-21 legislation, it did not threaten to veto it.
"The administration looks forward to working in Congress to ensure a comprehensive and balanced regulatory framework for digital assets...[to] promote the responsible development of digital assets," the statement says.
Faryar Shirzad, chief policy officer at cryptocurrency exchange Coinbase (COIN), called the statement โa big step forwardโ because, for the first time, the White House recognizes the need for comprehensive crypto legislation that creates a tailored regulatory regime.
Another reason for optimism is last week's vote in the House and Senate to repeal SEC accounting guidelines that opponents said made it too expensive for financial institutions to custody cryptoassets, such as bitcoin (BTCUSD) or ether. (ETHUSD), for its clients.
The Biden administration's shifting stance and growing support for reform among Democrats may indicate that politicians view opposing the crypto industry as a potential political liability.
โThis bill is a huge victory for our efforts to depoliticize the issue,โ North Carolina Democratic Rep. Wiley Nickel said Wednesday. "Whether you love or hate cryptocurrencies, you must support regulation. The status quo simply isn't working."
-Chris Matthews
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05/22/24 1800ET
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