Translation: Blockchain in Vernacular
The U.S. House of Representatives is voting today on FIT 21. Biden just said he wants comprehensive regulation of cryptocurrencies.
It's time to write another explainer post.
What is FIT21?
Why is this bill important?
What does FIT21 tell us about coalitions and power shifts in American politics?
1. What is FIT21?
FIT21 is the full name of the Financial Innovation and Technology for the 21st Century Act. FIT21 is also the first bill that attempts to comprehensively define how the U.S. cryptocurrency market should be regulated. FIT 21 has several key areas and provisions:
Defining the jurisdiction of the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission)
Consumer protection regarding transparency and disclosure of promoters and endorsers
Ban institutions from preventing people from using cryptocurrencies
Ask the Treasury to study stablecoins
FIT21 attempts to define the terms associated with decentralized systems and when a network reaches a level of sufficient decentralization that it is no longer considered a security. It introduces a process for certifying that an asset is sufficiently decentralized and classifying it as a commodity.
This is a huge breakthrough.
The SEC must review the application and respond within 90 days. If the SEC determines that an asset is operated without a controlling entity, the asset will be considered a commodity and subject to the jurisdiction of the CFTC.
For those skeptical of the SEC, this isn’t ideal. But having clear rules is an important step forward.
2. Why is FIT 21 important?
So why does all this matter? Why is FIT 21 important? After 3.5 years of hard work, the most important thing I have learned is that political and legislative progress is imperfect and often emergent. When you can turn some of your demands into actual law, you must seize the opportunity.
FIT21 wasn’t perfect, but it got us a step closer. Not only did we buy time for future struggles, we made real progress. We showed the world that we can get the job done. And we may not get another chance like this for years to come.
FIT21 has no counterpart in the Senate, so it will not become law yet. Today's vote was performative. But 80% of power is performative.
So who is performing? For whom? What do their performances tell us? Performances tell you where the world is going.
3. What does FIT21 tell us about political alliances and power changes in the United States?
This poll tells us:
Republicans have owned this issue from the beginning
Democrats fear losing votes, money, and ceding the issue to Republicans
The Democratic Party is moving away from Elizabeth Warren
The president is also moving away from Warren.
Note: Elizabeth Warren, a member of the Democratic Party, has great influence in American politics and has been involved in many policy and legislative initiatives.
The centers of power are shifting. Crypto is winning.
@PatrickMcHenry, @RepFrenchHill, @GOPMajorityWhip and others have been championing crypto for the Republican Party for years. With 50 million US crypto holders growing, they are extremely well positioned for the power transition. This is a huge affirmation of their strategy.
If you look at who's switching sides in the last 6 months, it's moderate Democrats. Similar to the Democrats who voted to overturn SAB121 like @RepRitchie, @RepMoulton, @RepSlotkin, now there are people like @RoKhanna, Jim Himes, @RepWileyNickel, etc. who are also voting with their Republican colleagues.
A year ago, this would have been quickly vetoed by the President. Now, the White House wants to help clarify cryptocurrency regulation and will not veto it. This is a 180-degree turn. The White House staff has been doing a great job in pushing this through and deserves great credit.
What does all this mean? What does it signal?
This shows that moderate Democrats realize that cryptocurrencies are important.
Shows there are enough people here to sway the vote.
Showing there is enough money available to help sway the election outcome.
Shows that the Democrats are losing these voters.
Elizabeth Warren has been at the center of the tech and cryptocurrency regulation movement. She lost a lot of power because of the loss of votes and donations she brought to the party ahead of the 2024 election. The Democratic Party has now shown that they do not want to follow Warren into oblivion.
In 2025, the Senate will appoint new commissioners for the SEC, CFTC, FDA, FTC, and other agencies.
If Warren had power, one could expect someone like Gensler.
If Warren didn't have power we would get someone like @HesterPeirce.
We need to encourage and support moderate Democrats. After the FIT21 vote, if your representative voted yes, send them an email thanking them.
If they voted against, ask them why. You can find representatives of both sides here: https://www.standwithcrypto.org/politicians