The so-called FIT21 legislation to establish a U.S. regulatory regime for digital assets is set for a floor vote next week, and the sector is telling House leaders the effort is "crucial."

The U.S. House of Representatives is on the verge of a vote that will represent the closest the cryptocurrency industry has ever been toward finally winning regulation in the U.S., and the sector's associations and top businesses are encouraging House leaders to support the effort.

Through the Crypto Council for Innovation, a coalition of digital assets organizations and companies, including Coinbase, Kraken, Andreessen Horowitz, the Digital Currency Group and about 50 others, wrote a letter to Speaker of the House Mike Johnson (R-La.) and Minority Leader Hakeem Jeffries (D-N.Y.), advocating for passage of the bill. The Financial Innovation and Technology for the 21st Century Act (FIT21) has been authorized for floor time next week, where observers are hoping to see a mid-week vote.

The bill would set the Commodity Futures Trading Commission (CFTC) as a leading regulator of digital assets, and it sets out clear divisions for what the CFTC will handle and what would fall under the reach of the Securities and Exchange Commission (SEC). It would establish consumer protections – including rules around custody of customers' assets and their treatment in bankruptcy – and set up further guardrails against risky behavior.

"By passing this legislation, we can accelerate the growth of blockchain technology and digital assets, fostering financial inclusion and protecting national security," according to the letter. "It is crucial for the U.S. to maintain its leadership in financial innovation."

The crypto industry is on a high in Washington at the moment, having watched both the House and Senate easily pass a resolution overturning a crypto accounting policy from the SEC, though President Joe Biden vowed to veto the effort. That move to erase the SEC's Staff Accounting Bulletin 121 (SAB 121) represented a fight that went decidedly in the industry's favor, drawing many supporters from the Democratic Party that's been more reticent than Republicans in backing crypto.

For that accounting tussle, more than one in five Senate Democrats voted on the industry's side, including Majority Leader Chuck Schumer (D-N.Y.), and it was about one in 10 Democrats in the House.

But the comprehensive legislation now approaching a House vote is of a much higher magnitude, and key Senate Democrats have so far seemed unprepared to match the House's effort. To date, the Senate has only shown a potential willingness to fit a different crypto bill – one regulating stablecoin issuers – into a package deal with other financial legislation.

Rep. Patrick McHenry (R-N.C.), the chairman of the House Financial Services Committee where the bill was launched, said the level of Democratic support for FIT21 in the House could be a major factor in whether the Senate is moved to action. When the measure cleared his committee, it did so with a handful of Democrats on board, despite opposition from their senior member, Rep. Maxine Waters (D-Calif.)

On its way toward the floor, the FIT21 effort drew a range of amendments called for by the House Rules Committee to meet a May 16 deadline.