The United States Congress will vote on a bill that defines crypto decentralization as no single entity with a control of more than 20% of the voting power.
The Web3 industry and digital asset sectors in the United States have experienced more notable regulatory shifts in 2024 than any other year. Ahead of this year’s presidential election in the United States, more regulators seeking elective positions have inclined their agendas toward the crypto industry. Moreover, more than 50 million American citizens are investors in the web3 space and digital assets.
As Coinspeaker previously reported, Bitcoin (BTC) is fully regulated in the United States as a commodity, such as gold and crude oil. Later this week, the United States Securities and Exchange Commission (SEC) will vote on whether to approve or reject spot Ethereum (ETH) ETFs.
a16z on US Crypto Regulatory Scope
According to a recent web3 letter from a16z crypto, an established private venture capital firm in the United States, all American voters should pay attention to the Congress bill dubbed the Financial Innovation and Technology for the 21st Century Act (FIT21). Notably, the US House of Representatives will vote on the FIT21 bill by the end of this month.
As a result, a16z has requested all American crypto investors to urge their respective leaders to vote in favor of the FIT21 bill. Furthermore, the bipartisan FIT21 bill was introduced by joint efforts by the House Committee on Financial Services and the House Committee on Agriculture to ensure clarity in the cryptocurrency industry.
“The FIT21 bill establishes a regulatory framework for US digital assets markets to clarify which digital assets are regulated by the Commodity Futures Trading Commission (CFTC) and which by the Securities and Exchange Commission (SEC). This is important because of the key differences between the definitions of “commodities” vs “securities”, which have consequences for how they are regulated,” a16z noted.
Most importantly, the FIT21 bill defines decentralization in the cryptocurrency industry on behalf of American investors. According to the FIT21 bill, a crypto project will be regarded as decentralized if no single entity holds 20 percent or more of the total voting power.
Bigger Picture and Market Implications
The FIT21 bill will significantly impact most of the cryptocurrency projects if passed later this month. As for the Ethereum ecosystem, top investors, such as Tron Founder Justin Sun, have indicated that Ether is a decentralized protocol with no single entity having the majority control.
Ethereum is a decentralized protocol, and we are ordinary participants in Ethereum. We have sufficient capital to provide TVL, node verification services for Ethereum, Tron, and all other types of L2 projects to secure all blockchains. We are here for the long-term building.
— H.E. Justin Sun 孙宇晨 (@justinsuntron) May 21, 2024
Meanwhile, if the FIT21 bill passes, it will categorize Ripple Labs-backed XRP as a security asset amid the ongoing lawsuit. Moreover, Ripple Labs controls more than 40 percent of the XRP total supply, which the company uses to support its operations.
Additionally, the bill will impact most of the meme coins, with insiders and developers on the wing over 80 percent of the total supply.
