- Crypto bill FIT21 sets new definitions for digital assets.
- The criteria determine if an asset is regulated as a security or commodity.
- It's a relief for the industry, but also comes with complications.
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Since the House passed FIT21, a bipartisan bill that could reshape US crypto, industry pundits have been on a victory tour.
But let’s get one thing straight: The bill is far from becoming law. Policy watchers say the chances of it passing the US Senate are slim.
It’s also received harsh words from the White House, Securities and Exchange Commission Chair Gary Gensler, and a flurry of lawmakers.
But after years of regulatory and enterprise battles, the crypto community is chalking it up as a win.
Especially builders behind decentralised platforms, which often fall through the cracks of existing legal frameworks.
Under FIT21, sufficiently decentralised digital assets would qualify as commodities. One of the criteria is that issuers or so-called affiliated persons can’t hold over 20% of the token and voting power for a project.
Centralised tokens that don’t meet this condition would qualify as securities. As such, they’d fall under the purview of the SEC (while decentralised tokens would be regulated by the Commodity Futures Trading Commission).
Is it clear enough for the crypto industry?
Nearly, says Rashan Colbert, head of policy at decentralised trading platform dYdX Trading.
“It may be hard for folks to meet different decentralisation thresholds and this movement back and forth between the two regulators will likely be extremely cumbersome in practice,” he told DL News.
The CFTC regulating a commodity spot market is also unusual, Colbert added.
Still, it’s a big step — especially for DeFi projects.
“The bill provides an enhanced level of comfort knowing that we have explicit authority to keep doing what we’re doing, which is really all we want at the moment,” he said.
Reach out to the author at inbar@dlnews.com.
