TL;DR
- The Blockchain Association has sent a letter to Congress requesting a vote on the 21st Century Financial Innovation and Technology Act (FIT21).
- The proposed legislation seeks to establish a regulatory framework for the digital assets and cryptocurrency sector in the US.
- Critics argue that regulation would slow innovation and harm users’ financial freedom.
Today, the Blockchain Association sent a letter to US Congressional leaders, urging a vote on the House floor for the 21st Century Technology and Financial Innovation Act, also known as FIT21 or HR 4763.
This bill, backed by companies such as Ripple, Kraken and Circle, is presented as a solution to provide regulatory clarity in the digital asset sector.
1/ Today, @BlockchainAssn members sent a letter to @SpeakerJohnson and @RepJeffries in support of a floor vote for the Financial Innovation and Technology for the 21st Century Act (#FIT21).https://t.co/RhBfe9Gg5p pic.twitter.com/BUoEnoOEAD
— Blockchain Association (@BlockchainAssn) May 20, 2024
However, many in the industry warn that any type of regulation could be counterproductive, slowing innovation and limiting users’ financial freedom.
Since the birth of Bitcoin in 2009, the blockchain and cryptocurrency industry has prospered precisely due to the lack of strict regulations.
The absence of government rules has allowed companies and developers to experiment and evolve without the restrictions imposed by bureaucracy.
The regulation proposed at FIT21, while intended to provide a clear framework and protections for consumers, could actually stifle the innovation that has characterized this sector.
Assigning primary responsibility for digital asset regulation to the Commodity Futures Trading Commission (CFTC) and increasing legal protections for consumers may sound good in theory.
However, in practice, this could mean more bureaucracy, higher compliance costs, and an overall slowdown in the pace of technological development.
Startups, which are the backbone of cryptocurrency innovation, could be especially affected by these new regulatory requirements, facing significant barriers to entering and competing in the market.
Regulation: A threat to the financial freedom of cryptocurrencies
Cryptocurrencies and blockchain technology were created with the vision of providing financial freedom and decentralization, moving away from the control of traditional institutions.
The introduction of regulations such as those proposed in FIT21 contradicts this fundamental vision, imposing restrictions that can limit users access and freedom to manage their own financial assets.
Additionally, critics point out that the regulation could push cryptocurrency companies to seek other countries with a more favorable environment, weakening the United States position in the global technology race.
Instead of protecting consumers, overregulation could leave them with fewer options and less control over their investments.
In a globalized market, companies and users will simply migrate to jurisdictions with more lax regulations, leaving the United States behind in terms of innovation and technological adoption.
The recent controversy over the SEC’s accounting bulletin SAB121 has already shown that regulation can be seen as a hindrance rather than a help.
Despite bipartisan support for eliminating this directive, President Joe Biden has resisted, arguing that its removal could cause financial instability.
However, this stance has been criticized by those who believe that regulation is unnecessary and detrimental to the growth of the sector.
