Financial Innovation and Technology for the 21st Century Act

10/4/2024, 7:57 PM

Financial Innovation and Technology for the 21st Century Act

This bill establishes a regulatory framework for digital assets.

The Commodity Futures Trading Commission (CFTC) must regulate a digital asset as a commodity if the blockchain, or digital ledger, on which it runs is functional and decentralized. The bill classifies a blockchain as decentralized if, among other requirements, no person has unilateral authority to control the blockchain or its usage, and no issuer or affiliated person has control of 20% or more of the digital asset or the voting power of the digital asset. In addition, the bill provides the CFTC with exclusive regulatory authority over cash or spot markets for digital commodities.

The Securities and Exchange Commission (SEC) must regulate a digital asset as a security if its associated blockchain is functional but not decentralized. However, the bill establishes certain exceptions to SEC regulation for digital assets that limit annual sales, restrict nonaccredited investor access, and satisfy disclosure and compliance requirements. The bill also sets forth requirements for primary and secondary market transactions.

The CFTC and SEC must jointly issue rules to define terms and exempt dually registered exchanges from duplicative rules.

 

The Bill 118 hr 4763, also known as the Financial Innovation and Technology for the 21st Century Act, aims to promote innovation and technological advancements in the financial sector. The bill focuses on modernizing regulations and promoting the use of new technologies to improve financial services for consumers and businesses.

Key provisions of the bill include the establishment of a regulatory sandbox, which allows financial technology (fintech) companies to test new products and services in a controlled environment without facing full regulatory compliance. This is intended to encourage innovation and foster the development of new financial technologies.

Additionally, the bill seeks to streamline the regulatory process for fintech companies, making it easier for them to navigate the complex regulatory landscape. This includes provisions for regulatory harmonization and coordination between federal and state agencies, as well as the creation of a fintech advisory council to provide guidance and support to the industry. Overall, the Financial Innovation and Technology for the 21st Century Act aims to promote innovation and technological advancements in the financial sector, while also ensuring consumer protection and regulatory compliance. It is seen as a step towards modernizing the financial industry and keeping pace with the rapidly evolving technological landscape.
Congress
118
Number
HR - 4763
Introduced on
2023-07-20
# Amendments
4
Sponsors
+5
Cosponsors
+5

Variations and Revisions

9/9/2024
Text
PDF
XML

Status of Legislation

Bill Introduced
Introduced to House
Passed in House
Introduced to Senate
Senate to Vote

Purpose and Summary

Financial Innovation and Technology for the 21st Century Act

This bill establishes a regulatory framework for digital assets.

The Commodity Futures Trading Commission (CFTC) must regulate a digital asset as a commodity if the blockchain, or digital ledger, on which it runs is functional and decentralized. The bill classifies a blockchain as decentralized if, among other requirements, no person has unilateral authority to control the blockchain or its usage, and no issuer or affiliated person has control of 20% or more of the digital asset or the voting power of the digital asset. In addition, the bill provides the CFTC with exclusive regulatory authority over cash or spot markets for digital commodities.

The Securities and Exchange Commission (SEC) must regulate a digital asset as a security if its associated blockchain is functional but not decentralized. However, the bill establishes certain exceptions to SEC regulation for digital assets that limit annual sales, restrict nonaccredited investor access, and satisfy disclosure and compliance requirements. The bill also sets forth requirements for primary and secondary market transactions.

The CFTC and SEC must jointly issue rules to define terms and exempt dually registered exchanges from duplicative rules.

 

The Bill 118 hr 4763, also known as the Financial Innovation and Technology for the 21st Century Act, aims to promote innovation and technological advancements in the financial sector. The bill focuses on modernizing regulations and promoting the use of new technologies to improve financial services for consumers and businesses.

Key provisions of the bill include the establishment of a regulatory sandbox, which allows financial technology (fintech) companies to test new products and services in a controlled environment without facing full regulatory compliance. This is intended to encourage innovation and foster the development of new financial technologies.

Additionally, the bill seeks to streamline the regulatory process for fintech companies, making it easier for them to navigate the complex regulatory landscape. This includes provisions for regulatory harmonization and coordination between federal and state agencies, as well as the creation of a fintech advisory council to provide guidance and support to the industry. Overall, the Financial Innovation and Technology for the 21st Century Act aims to promote innovation and technological advancements in the financial sector, while also ensuring consumer protection and regulatory compliance. It is seen as a step towards modernizing the financial industry and keeping pace with the rapidly evolving technological landscape.
Alternative Names
Official Title as IntroducedTo provide for a system of regulation of digital assets by the Commodity Futures Trading Commission and the Securities and Exchange Commission, and for other purposes.
Policy Areas
Finance and Financial Sector
Potential Impact
Administrative law and regulatory procedures•
Advanced technology and technological innovations•
Commodities markets•
Commodity Futures Trading Commission•
Computers and information technology•
Currency•
Digital media•
Licensing and registrations•
Securities•
Securities and Exchange Commission (SEC)

Comments

Recent Activity

Latest Summary5/20/2024

Financial Innovation and Technology for the 21st Century Act

This bill establishes a regulatory framework for digital assets.

The Commodity Futures Trading Commission (CFTC) must regulate a digital asset as a commodit...

Latest Action9/9/2024
Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.