‘Huge Win for Web3’: Indian Crypto Industry Reacts as US House’ Approves FIT21 Bill

The US House of Representatives this week gave the green light to a new bill that aims to regulate the crypto sector. While the FIT21 (Financial Innovation and Technology for the 21st Century Act) bill is still awaiting approval by the US Senate, stakeholders in India's crypto space and Web3 have praised the decision taken by lectively by the US Democratic and Republican opposition parties. Indian crypto commentators call the development “historic” and “pivotal” for the global crypto sector.

The United States is considered the largest crypto market in the world. According to Security.org, 40 percent of American adults now own cryptocurrency, up from 30 percent in 2023. Decisions around cryptocurrencies made 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 control that the US has over the trajectory of the crypto industry, Indian industry commentators Web3 say that the US regulatory framework for crypto could show positive results. Speaking to Gadgets 360, Sharedeum co-founder and CEO Nischal Shetty outlined what the bill could mean for Indian crypto enthusiasts.

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

The crypto sector, despite its advanced financial services offerings, is fraught with uncertainty as digital assets resist simple categorization. Segregating these assets into securities or commodities and ensuring their legal use is a top priority for the US and other countries.

The US move to distinguish different categories of crypto assets, according to Shetty, will have a ripple effect on the international crypto industry.

“To capitalize on this momentum, it is vital to focus on growing the Web3 ecosystem in India. This includes educating young people 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,” added Shetty.

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

Shekhar noted that these rules could reduce the SEC's involvement in industry oversight. In the past, actions by the US SEC have been rejected by the global crypto fraternity, which claims the regulator's investigations into various digital asset firms over alleged wrongdoing end up hampering the growth of cryptocurrencies.

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

Shekhar, however, said the bill could go a long way in bringing regulatory clarity to the sector. “This is a massive win for crypto given that it clarifies the roles of the SEC and the CFTC in regulating crypto. The FIT21 bill is considered a crucial step in 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,” noted Shekhar.

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

Crypto rules are also being rolled out gradually in India to ensure that the communities of investors and traders who engage with digital assets, along with companies that provide services around those assets, are safe and compliant the law