The US House of Representatives is set to advance a significant bill this week aimed at reforming cryptocurrency laws. Reports suggest that on May 22, 2022, Congress will introduce the Financial Innovation and Technology for the 21st Century Act, or FIT21 Act. This bipartisan legislation, supported by Democrats and Republicans alike, aims to bring regulatory clarity to digital assets.

One key aspect of the proposed bill is the allocation of regulatory powers between the SEC and the CFTC. The FIT21 Act would grant the CFTC authority to regulate digital commodity markets, including exchanges and broker-dealers. Additionally, the bill seeks to provide clarity on the classification of tokens, stating that the mere existence of an investment contract does not automatically classify a token as a security. This clarification could resolve many legal disputes involving token issuers and crypto exchanges.

Despite encountering opposition from some House members, particularly Democrats concerned about potential limitations on the SEC, the bill is expected to pass the House with Republican majority support and backing from some Democrats. However, its prospects in the Senate are uncertain.

These legislative efforts occur alongside other regulatory actions regarding cryptocurrencies. The US Senate recently passed Joint Resolution 109 to repeal SAB 121 issued by the SEC. While this resolution heads to the President's desk, ongoing legislative and regulatory developments will continue to shape cryptocurrency regulation in the United States.