Key Takeaways
The House recently passed the Financial Innovation and Technology for the 21st Century Act (“FIT21”). If FIT21 becomes law, it would:
- More clearly define crypto asset regulatory boundaries for Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”), providing statutory definitions for “restricted digital assets” and “digital commodities.”
- For the first time, give the CFTC plenary jurisdiction over spot trading in digital commodities, instead of the limited jurisdiction the CFTC now has over such spot commodities.
- Provide for a “certification” process, through which a blockchain could be shown to “decentralized,” permitting the assets on such blockchain to be regulated as digital commodities, rather than securities.
- Create new categories of SEC and CFTC registrants, providing a pathway for platforms to offer trading in both digital commodities and securities.
- Provide for provisional registration to transition to the new framework, with a limited safe harbor from SEC enforcement actions.
- Provide exemptions from regulation for certain enumerated types of decentralized finance (“DeFi”) activity.
- Mandate joint rulemaking by the SEC and CFTC in certain areas of shared jurisdiction.
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