Bitcoin and ethereum rally on proposed crypto legislation

Bitcoin (BTC-USD) and ethereum (ETH-USD) are rallying this week as investors are optimistic about a new regulatory framework and approval for an ether ETF that could boost the industry. Yahoo Finance reporter Jennifer Schonberger has more on the new legislation that could change the crypto sector.

The House is set to vote today for the first time on crypto legislation known as the Financial Innovation and Technology for the 21st Century Act, or FIT21. This act would make the Commodities Futures Trading Commission (CFTC) the leading regulator of digital assets and establish consumer protections.

Republican lawmakers say FIT21 will bring clarity to the crypto industry, while Democrats believe it would effectively deregulate most cryptocurrencies by removing them from the Securities and Exchange Commission's (SEC) purview.

The vote will occur around 5 p.m. ET today and is expected to pass. However, FIT21's future in the Senate remains unclear.

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This post was written by Melanie Riehl

Video transcript

Let's turn now to crypto, both Bitcoin and Ethereum.

Rallying this week, investors looking to Washington DC hopeful that regulation and new products potentially could expand the industry's mainstream appeal.

Joining us now to lay out what's on the table for crypto in Washington is our very own.

Jennifer Schomer, Jen.

Good morning, Shana.

That's right.

The crypto world hopeful for some gains this week in Washington as it pushes for a new regulatory framework and approval for an E ETF.

Today, the House set to vote for the very first time on comprehensive crypto legislation called the Financial Innovation and Technology for the 21st Century Act or as it's known for short fit 21.

This legislation which house Financial Services chair Patrick mchenry has been pushing for the better part of a year would establish the commodities future and commission as the leading regulator of digital assets.

There would be clear divisions for what the CFTC will regulate and what would fall under the purview of the Securities and Exchange Commission which has vehemently cracked down on the crypto industry with a litany of enforcement actions.

This legislation would also establish consumer protections and borrow the sort of co mingling of custom funds that played a role in the undoing of the crypto exchange FTX back in 2022.

Now, Republican lawmakers say this legislation will bring clarity for the crypto industry.

But most Democrats led by House Financial Services Committee, ranking member Maxine Waters opposed the Bill waters warns the bill would effectively deregulate most crypto by removing them from the purview of the SEC.

In a rare rebuke sec chair, Gary Ginzler put out a lengthy statement this morning on the legislation saying, quote, it would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors in capital markets at a measurable risk.

The House expected to vote on this legislation around 5 p.m. this afternoon where it is expected to pass the chamber largely thanks to support from Republicans and a handful of Democrats.

But prospects in the Senate remain.

Dimmer mchenry told reporters late yesterday afternoon that he's hopeful that a strong vote tally will galvanize the Senate to take a fresh look at this legislation.

Meanwhile, elsewhere here in Washington, the SEC reportedly facing a deadline of May 23rd that's tomorrow for approval or denial of an E ETF when I asked the SEC for comment, they said we do not comment on individual filings.