Financial Innovation and Technology for the 21st Century Act (FIT21) It was proposed by Republican members of the House Financial Services Committee and the Agriculture Committee on July 20, 2023, and passed the votes of the two House committees on July 26 and 27 respectively. The bill aims to establish a regulatory framework for the digital asset market in the United States, provide clear rules for market participants, and protect investors and consumers.

The sponsors of the "21st Century Financial Innovation and Technology Act" are high-profile, including Chairman of the House Agriculture Committee (Glenn "GT" Thompson) and Chairman of the House Financial Services Committee (Patrick McHenry). The bill has the support of Republicans and crypto figures. Patrick McHenry publicly stated that this was the first time the committee had revised cryptocurrency legislation and emphasized that the United States would not lag behind other countries in cryptocurrency regulation. CoinBase CEO Brian Armstrong also publicly supported the bill before the vote. Brian sees this as a vote to protect cryptocurrency, American innovation, and security.

Clear the jurisdiction of CFTC and SEC

The bill advocates that digital assets be jointly managed by the CFTC and SEC, with the CFTC as the main and the SEC as the supplement. The bill divides digital assets into digital commodities, restricted digital assets and payment stablecoins. Among them, digital commodities are managed by the CFTC, and restricted digital assets are managed by the SEC. Payment stablecoins can be traded on venues regulated by the SEC and CFTC, but neither the SEC nor the CFTC has the authority to regulate stablecoins or stablecoin issuers.

What are digital goods? The bill stipulates that when the relevant blockchain network of a digital asset meets the following two conditions at the same time, the asset is recognized as a digital commodity: 1) Functional network 2) Decentralization. Functional network refers to the network on which digital assets can be used for value transmission and storage, participation in services or applications, and participation in governance. Decentralization means that no one person or entity can unilaterally control the blockchain. If a digital asset does not meet the conditions of a digital commodity, it is considered a restricted digital asset.

Similarly, the bill divides intermediaries into digital commodity intermediaries and digital asset intermediaries. Digital commodity intermediaries are regulated by the CFTC, while digital asset intermediaries are regulated by the SEC.

Information Disclosure and Consumer Protection

For digital assets and blockchain systems related to digital assets, the bill requires them to disclose source code and transaction records , economic model, development plan, relevant units and personnel, risk factors, etc.

For intermediaries, before providing services, they need to prove to the CFTC that they are not involved in market manipulation and register with a specific futures association. After registration, intermediaries should meet various requirements set forth in the bill during operation, including meeting business conduct standards, minimum capital requirements, ensuring fair transactions, segregating customer assets, disclosing operating conditions, account books, conflicts of interest, etc.; if violations occur , will be punished by regulatory agencies.

Auxiliary activities do not need to be registered with regulatory agencies

The bill specifically states that personnel involved in auxiliary activities related to blockchain operations do not need to register with regulatory agencies, such as: Network verification, node management, providing API/RPC services, developing, maintaining or managing blockchain systems, etc.