‘Huge Win for Web3’: Indian Crypto Industry on US’ FIT21 Approval

The US House of Representatives, this week, greenlit a new bill that aims to regulate the crypto sector. While the FIT21 (Financial Innovation and Technology for the 21st Century Act) bill still awaits approval from the US Senate, stakeholders of India’s crypto and Web3 space have lauded the decision taken collectively by both US’ opposing Democratic and Republican parties. Indian crypto commentators are calling the development ‘historic’ and ‘pivotal’ for the global crypto sector.

The US is touted as the largest crypto market in the world. As per Security.org, 40 percent of American adults now own crypto, up from 30 percent in 2023. Decisions around cryptocurrencies taken in the US have had a substantial impact on the global crypto sector. BTC ETFs saw an influx of billions of dollars after they were approved earlier this year by the US SEC.

Assessing the hold that the US has over the trajectory of the crypto industry, commentators from the Indian Web3 sector say that the US’ regulatory framework for crypto could show positive results. In conversation with Gadgets 360, Sharedeum co-founder and CEO Nischal Shetty noted what the bill could mean for Indian crypto enthusiasts.

“The US is taking a crucial step towards integrating crypto assets with traditional markets, a move that India should closely consider. The FIT21 Act is a huge win for the Web3 ecosystem. By offering regulatory clarity and fostering innovation, this legislation has the potential to drive wider crypto adoption and expand the Web3 landscape,” Shetty said.

The crypto sector, despite its advanced financial services offerings, is riddled with uncertainty as digital assets resist simple categorisation. Segregating these assets into securities or commodities and ensuring their lawful usage is among top priorities for the US as well as other countries.

The US’ move towards distinguishing different categories for crypto assets, as per Shetty, will have a ripple effect on the international crypto industry.

“To capitalise on this momentum, it’s vital to focus on growing the Web3 ecosystem in India. This includes educating the youth about Web3, increasing the number of developers working on Web3 products, and creating more career opportunities in this space. With the clarity and support provided by initiatives like FIT21, we can expect a significant boost in adoption, which will naturally lead to better tax laws and regulatory frameworks,” Shetty added.

The first approval for FIT21 comes just before Ether ETFs are expecting approvals in the US. While the bill still awaits clearance from the US Senate, the timing of the approval of these laws has been called a watershed moment for the crypto industry by Avinash Shekhar, co-founder and CEO of Pi42, a crypto-INR futures exchange.

Shekhar noted that these rules could reduce the involvement of the SEC in industry oversight. In the past, the US SEC’s actions have been begrudged by the global crypto fraternity, who claim that the regulatory body’s investigations into several digital assets firms over reported irregularities end up hindering crypto growth.

The crypto sector, however, remains under the cloud of numerous allegations of fraud and financial irregularities against major companies. In November 2022, FTX crypto exchange collapsed as it came under regulatory and legal scrutiny over allegations of fraud. The ensuing investigation and trial led to the firm’s former CEO and co-founder, Sam Bankman-Fried, being sentenced to 25 years in prison in March. Binance, the world’s biggest crypto exchange, and its co-founder Changpeng Zhao, were found guilty of money laundering charges in the US, before Zhao accepted a plea deal and was sentenced to four months in prison in April. These scandals end up shaking investor sentiment, leading to a drop in the prices of most assets.

Shekhar, however, said the bill could go a long way in bringing regulatory clarity to the sector. “This is a massive win for crypto considering it clarifies the roles of the SEC and CFTC in regulating crypto. The FIT21 bill is seen as a crucial step towards providing the regulatory clarity needed to support the growth and maturation of the digital asset ecosystem in the US while protecting consumers and maintaining market integrity,” Shekhar noted.

Crypto commentators in India also reacted to the development on social media.

Crypto rules are gradually being deployed in India, as well, to make sure that investor and trader communities engaging with digital assets, along with the companies offering services around these assets, are safe and under legal compliance.