In a significant move towards regulating the cryptocurrency industry, eight House Democrats have been actively advocating for the passage of the Financial Innovation and Technology for the 21st Century Act (FIT21). Despite being predominantly Republican-driven, the bill aims to establish comprehensive regulations for the U.S. crypto markets.

The U.S. House of Representatives is scheduled to hold a final vote on FIT21 on Wednesday, marking a crucial milestone for the industry. The lawmakers believe that this legislation should not be a partisan issue and have called upon their Democratic colleagues to support the bill.

The memo, shared with CoinDesk by a congressional aide, was signed by Representatives Wiley Nickel (D-N.C.), Yadira Caraveo (D-Colo.), Jim Himes (D-Conn.), Jasmine Crockett (D-Tex.), Ritchie Torres (D-N.Y.), Darren Soto (D-Fla.), Josh Gottheimer (D-N.J.), and Don Davis (D-N.C.). They emphasized the significance of regulating the digital asset markets and called for swift action in passing the bill.

However, while the bill enjoys support from both sides of the aisle in the House, its fate in the Senate remains uncertain. Notably, the lack of progress in the Senate raises concerns about the prospects of the crypto market-structure legislation.

To address this, senior staff from the House Financial Services and Agriculture committees have been engaging in discussions with Senate counterparts. They are also open to considering legislative alternatives that could facilitate the bill's progress before the congressional session concludes.

Representative Patrick McHenry (R-N.C.), the chairman of the House Financial Services Committee, is optimistic about garnering significant support in the House, which could pave the way for momentum. He pointed out that lawmakers are becoming increasingly aware of the influence of crypto voters and voiced his appreciation for their support.

FIT21 is designed to establish a clear framework for digital assets in the U.S., covering regulations for tokens and exchanges. It includes provisions for consumer protections, disclosures, and addresses the prevention of illicit finance through cryptocurrency. If approved, it would mark the first comprehensive crypto legislation to reach a final decision in either chamber of Congress.

The Democratic advocates have argued that intervening to regulate the crypto markets is essential given ongoing legal battles between leading crypto businesses and the Securities and Exchange Commission (SEC). They also expressed concerns that the U.S. is lagging behind other jurisdictions that have already implemented regulatory frameworks in the industry.

Highlighting the widespread participation of Americans in crypto, the lawmakers stressed that approximately 20% of the population has invested, traded, or used cryptocurrencies. They believe that it is imperative for Congress to pass responsible legislation that encompasses this new generation of internet technology.

Unlike a recent vote in the Senate to reverse an SEC crypto account policy, FIT21 has not faced any promises of a veto from the White House, providing an opportunity for bipartisan support. Republican aides anticipate that some of the Democrats who previously voted to overturn the SEC policy might also support this bill.

FIT21 has previously cleared House committees with the support of some Democrats. While House Financial Services Committee Ranking Member Maxine Waters (D-Calif.) and House Agriculture Committee Ranking Member David Scott (D-Ga.) oppose the bill, they have stated that they will not actively organize any voting against it.

Consumer advocates, such as Americans for Financial Reform, argue against the bill, stating that it lacks sufficient consumer protections and employs a potentially manipulative definition of decentralization for regulation.

The urgency to pass crypto legislation is underscored by Representative Glenn "G.T." Thompson (R-Pa.), chairman of the Agriculture Committee, who noted that the lack of clear regulations has compelled crypto businesses to leave the U.S.

In the Senate, discussions are underway regarding the potential alignment of the FIT21 bill with a wide-ranging bill put forth by Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.). Nonetheless, there are doubts about the bill's prospects in the Senate during this congressional session.

An important aspect that needs to be resolved is the funding of the Commodity Futures Trading Commission, which would play a significant role in regulating the cryptocurrency spot markets. At present, the agency operates on a minuscule budget compared to its counterpart.

As the House prepares for the vote on FIT21, the crypto industry awaits the outcome and remains hopeful that significant progress can be made in regulating this rapidly growing sector.