In a landmark decision, the US House of Representatives passed its first major cryptocurrency regulation bill on May 22. The bill, Financial Innovation and Technology for the 21st Century Act (or FIT21 for short), passed with a resounding 279-136, indicating how much bipartisan support there is for crypto regulation. While it isn’t guaranteed to pass in the Senate, FIT21 is momentous in that it pushes the inevitable launch of regulatory framework in the US one step closer to becoming a reality. Cryptocurrency regulation in the US has been slow, but government regulation would be a big benefit to the cryptocurrency industry as it would make it easier for institutional money to jump on board.
FIT21 is broad reaching and inclusive, establishing a regulatory regime, creating consumer protections, appointing the Commodity Futures Trading Commission as the leading regulator, and defining the difference between crypto securities and crypto commodities.
Those in opposition to the bill included Maxine Waters, who voiced that crypto securities were being traded unlawfully and FIT21 would perpetuate that, and the Securities and Exchange Commission, which expressed that the bill was unnecessary and that it complicated existing securities regulations.
Even after passing the House so successfully, the bill has no counterpart in the Senate, as parallel committees have not yet been established. As a result, it will likely not pass when it arrives on the senators’ desks.
Despite its likelihood of failure in the Senate, FIT21 has paved the way for future legislation that would establish clear regulations for crypto in the US – and achieved the Herculean act of winning Democrats to its side. Now that more Democrats are willing to stand alongside Republicans in supporting crypto regulation, future prospects are significantly more rosy.
For those who are already invested in crypto or are using it regularly to conduct transactions, having additional regulations in place may seem like a not-so-big deal. However, once the US finally puts regulatory framework in place (thereby catching up with the rest of the world), it will open the floodgates to crypto-based companies and aspiring investors who have been holding back to avoid getting entangled in the legal weeds.
Consider how numerous companies – from Coinbase to Gemini to Bittrex – opened offices overseas last year in response to the SEC’s heavy-handed legal attacks against crypto-based operations. It’s easy to see why no CEO would like to risk substantial fees and court costs simply to continue operations in the US. Instead, it’s simpler and safer to do business from countries that have already established clear regulations.
Apart from crypto companies staying on-shore, the impact of crypto regulation would be significant to investors. Some investors with deep pockets – namely at the institutional level – have refrained from engaging in crypto until regulations are sorted out in the US. That’s also true for smaller investors who aren’t willing to jump on board until the US has its act together.
Once regulation happens, in other words, we can expect a flood of fresh investments in the crypto sphere, which will in turn drive prices up all the more. For investors who are already holding crypto – such as in IRS-approved crypto IRAs – that translates to future gains.
With regulation on the horizon, now is the time to invest in crypto for those who would like to best capture some of those gains. Find out how you can open your own Bitcoin IRA by contacting us today.
