In a historic move, the U.S. House of Representatives approved the Financial Innovation and Technology for the 21st Century Act on Wednesday, setting out a comprehensive framework for regulating digital assets. This landmark legislation, which garnered strong bipartisan support, aims to delineate the roles of federal agencies in overseeing digital assets, including cryptocurrencies.
The legislation, a collaborative effort between the House Financial Services and Agriculture Committees, represents the first comprehensive proposal passed by either chamber of Congress. The bill received significant bipartisan backing, with 71 Democrats joining nearly all Republicans to pass the measure with a vote of 279-136.
All four of Arkansas’s House members—Rick Crawford, French Hill, Steve Womack, and Bruce Westerman—voted in favor of the bill. Representative French Hill, who played a key role in introducing the legislation last July, emphasized the bipartisan consensus on the need to address regulatory gaps in the digital asset sector. “Innovation and keeping America No. 1 in technological advance should be a bipartisan objective,” Hill remarked. “And I believe this vote demonstrates that it is.”
The bill aims to clarify the regulatory authority of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Under the new framework, the CFTC would regulate digital assets as commodities if their blockchain is functional and no single entity has unilateral control. Conversely, the SEC would oversee digital assets offered as part of investment contracts. Exchanges, brokers, and dealers would be required to register with these agencies, which would jointly issue rules to prevent regulatory overlap.
The initiative to draft this legislation began following the collapse of cryptocurrency exchange FTX in December 2022. Lawmakers also cited regulatory advancements in the European Union and other countries as motivation to establish a similar framework in the U.S.
House Financial Services Committee Chairman Patrick McHenry expressed regret that the bill was not passed earlier, which would have provided the Senate more time to consider it or develop a bicameral agreement. “We’re now in May of an election year, but an interesting thing has turned,” McHenry noted. “We have more of our colleagues who understand digital assets than they did in July of last year.”
The SEC and CFTC currently have some authority over digital assets under older regulations that predate the emergence of cryptocurrencies. McHenry highlighted that U.S. companies are considering relocating overseas due to more modern regulatory environments in places like Europe, the U.K., Singapore, Japan, and Hong Kong. “We have never been behind Europe in innovation,” he asserted. “When Europe has an advanced regime, we then see that we have to compete for innovation and for the investment to occur.”
Despite the significant support, the bill faced opposition from within the House. Representative Maxine Waters, the ranking Democrat on the House Financial Services Committee, argued that the legislation creates regulatory loopholes and lacks sufficient measures to prevent fraud and protect investors. “Ultimately, the massive loopholes in this bill would degrade investor trust, cause broad market uncertainty, and allow fraud to proliferate,” Waters warned.
Representative Dusty Johnson, a proponent of the bill, countered that the current regulatory gap poses risks to consumers and stifles innovation. “That regulatory gap puts at risk consumers, it is pushing trading volume overseas, and it is stifling innovation,” he stated.
The Senate has also been active in the digital asset space, with Senators Cynthia Lummis and Kirsten Gillibrand proposing similar legislation. Discussions have been ongoing between the House and Senate committees with jurisdiction over commodities.
As the legislative session progresses, McHenry and Hill remain optimistic about the bill’s prospects. Hill pointed to the strong bipartisan support in the House as a signal to the Senate that there is a united desire to create a clear regulatory framework for digital assets. “That should send a message to the Senate that Republicans and Democrats are ready to make law here,” Hill concluded.
