Why is the US FIT21 Act important?
Businesses that currently use cryptocurrencies to send and receive payments face many difficulties, especially in terms of compliance: Businesses are often required to comply with the regulations of different countries when using cryptocurrencies for transactions, including anti-money laundering (AML) and know-your-customer (KYC) requirements. These compliance requirements may vary by region, increasing compliance costs and operational complexity for businesses, and in some jurisdictions, businesses need to apply for specific licenses to legally use cryptocurrencies to receive and make payments. .
For example, in the United States, some states require companies to obtain cryptocurrency-related business licenses, such as New York State’s BitLicense. These licenses are expensive and cumbersome to apply for and maintain.
Cryptocurrencies have stricter compliance requirements than traditional payment systems (such as credit cards). Transactions using a credit card do not require businesses to apply for PCI-DSS certification (an industry standard used to protect the data of credit card holders). This double standard creates additional obstacles for the adoption of cryptocurrencies in sending and receiving payments.
However, this situation may change due to the "Financial Innovation and Technology Act for the 21st Century" (FIT21) passed by the U.S. House of Representatives with a vote of 279 to 136 on May 22, 2024, which may become the most far-reaching impact on Crypto in the future. One of the bills.
💡Extended reading: What is the "FIT21 bill" that will be voted on as soon as this week to make the United States a powerful country in the encryption industry?
Three key elements to classify whether it is a security
The bill proposes several key elements for distinguishing whether digital assets are securities or commodities:
Investment Contract (The Howey Test): If the purchase of a digital asset is considered an investment and the investor expects to make a profit through the efforts of the entrepreneur or a third party, the asset is generally considered a security.
Use and Consumption: If a digital asset is primarily used as a medium for consuming goods or services, such as a token that can be used to purchase a specific service or product, it may not be classified as a security, but rather as a commodity or other non-security asset.
Degree of decentralization: The bill specifically emphasizes the degree of decentralization of blockchain networks. If the network behind a certain digital asset is highly decentralized and there is no central authority controlling the functions of the network or the asset, the asset may be more likely to be viewed as a commodity.
These definitions and classification standards pave the way for the compliance and legalization of more crypto-assets in the future, and can almost declare that the gray era that has lasted for more than ten years since the birth of cryptocurrencies has ended and officially entered a new world.
The impact of the FIT21 bill on businesses
The passage of the FIT21 bill will significantly reduce the compliance costs and operational complexity for companies to adopt cryptocurrency payments. This is mainly reflected in the following aspects:
Unified regulatory framework: The FIT21 bill provides a clear regulatory framework so that companies no longer need to face multiple different legal and regulatory requirements when adopting cryptocurrencies, reducing compliance uncertainty and risks.
Reduced compliance costs: Due to unified regulatory requirements, companies no longer need to apply for multiple licenses in different countries or regions, which will significantly reduce compliance costs and make it more affordable for more companies to use cryptocurrency for transactions.
Enhance trust and transparency: The bill emphasizes decentralization and transparency, features that help enhance market trust in cryptocurrencies. Businesses and consumers will be more willing to accept cryptocurrencies as a legitimate payment method.
Promote technological innovation: The FIT21 bill supports technology and innovation, especially research in the fields of DeFi and NFT, which will promote more technological innovation, improve the security and convenience of decentralized wallet services, and thus attract more companies use.
As more cryptocurrencies comply with regulatory requirements, businesses can further expand their markets, reach more consumers who use cryptocurrencies, and hopefully become a common payment solution for businesses.
The layout and prospects of NoFi
This is why I have always been optimistic about the future development of NoFi. This trend not only reflects the huge potential of blockchain technology, but also demonstrates the infinite possibilities of future financial services. What differentiates cryptocurrencies from other securities is that NoFi gives us more autonomy, better security, and greater flexibility than traditional financial services. This is why KryptoGO focuses on developing non-custodial wallet services. Through NoFi, we can provide enterprises and consumers with more attractive solutions that reduce transaction costs, improve security, and achieve true decentralization.
The passage of the FIT21 bill has brought great impetus to the development of NoFi. This bill not only provides legal protection for DeFi projects, but also injects new vitality into the entire cryptocurrency industry.
I believe that NoFi will play an increasingly important role in the financial services field in the future and bring more innovation and change. With the rise of NoFi, we will see more application scenarios and market opportunities. High-quality non-custodial wallet services can help more companies undergo digital transformation and promote the progress of the entire industry.
Opinion articles present diverse opinions and do not represent the position of "WEB3+"
Review editor: Shao Yuanting
More coverage
[Opinion] Cryptocurrency creates a new incentive model! How can "point rewards" in the Web3 era upgrade membership experience?
[Opinion] New technology that is harmful to currency prices! Looking at the negative impact of technology on Ethereum from the supply side
