DeFi
Is the US bullish on DeFi? Almost, says industry expert – DL News
- The FIT21 crypto bill sets out new definitions for digital assets.
- The criteria determine whether an asset is regulated as a security or a commodity.
- This is a relief for the industry, but it also brings complications.
A version of this story appeared in our newsletter The Guidance on May 27. here.
Since the House passed FIT21, a bipartisan bill that could reshape American crypto, industry experts have been on a victory tour.
But let’s be clear: the bill is far from being passed. Political observers say the chances of it passing the U.S. Senate are slim.
He also received harsh words from the White House, Securities and Exchange Commission Chairman Gary Gensler and a slew of lawmakers.
But after years of regulatory and business battles, the crypto community considers this a victory.
Especially the builders behind decentralized platforms, who often fall through the cracks of existing legal frameworks.
Under FIT21, digital assets that are sufficiently decentralized would be considered commodities. One of the criteria is that issuers or so-called affiliated persons cannot hold more than 20% of the tokens and voting rights for a project.
Centralized tokens that do not meet this condition would be considered securities. As such, they would fall under the jurisdiction of the SEC (while decentralized tokens would be regulated by the Commodity Futures Trading Commission).
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Is this clear enough for the crypto industry?
Almost, says Rashan Colbert, head of policy at decentralized trading platform dYdX Trading.
“It may be difficult for people to meet different decentralization thresholds and this back and forth movement between the two regulators is likely to be extremely cumbersome in practice,” he said. DL News.
The CFTC regulating a commodity spot market is also unusual, Colbert added.
Still, this is a big step forward, especially for DeFi projects.
“The bill provides an increased level of comfort, knowing that we have the explicit authority to continue doing what we’re doing, which is really all we want at the moment,” he said.
Contact the author at inbar@dlnews.com.