House Financial Services Committee’s Ranking Member Maxine Waters (D-Calif.) and House Agriculture Committee’s Ranking Member David Scott (D-Ga.)—prominent Democrats in their respective domains—have dispatched a communiqué to Democratic House members expressing their firm opposition to H.R. 4763, the Financial Innovation and Technology for the 21st Century Act (FIT21), yet they are not mobilizing their members against it, as reported by Politico.

Waters and Scott assert that the bill erodes long-standing legal foundations and introduces ambiguity into the conventional securities market. “This verbiage disrupts decades of jurisprudence and case law, thereby instilling uncertainty in our traditional securities market,” articulated the Democrat Whip’s office in an email, initially acquired by Politico.

The email articulates that the legislation provides a sanctuary where entities can submit a “declaration of intent to register” if they fulfill specific criteria, which, according to them, exempts them from securities laws’ rules and regulations until the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) finalize new guidelines.

Such provisions, the email continues, “dilute investor protections and pave the way for deceit and market manipulation.” A “Dear Colleague” letter posted on the House Financial Services Committee’s Democrats webpage elaborates on the leaders’ disapproval of the bill, dubbing it the “not fit for purpose act.”

A detailed list asserts that the bill would establish a “route for ‘investment contract assets’ with no alternative regulator, implying that nearly no laws or regulations would govern them.” A Democrat aide informed a global crypto media firm CoinDesk that legislators would receive a briefing from the SEC on Tuesday morning.

Should the bill become law, it would prevent shareholders from litigating against publicly traded companies, override state regulations concerning digital assets, diminish fiduciary obligations, and destabilize capital markets, the letter claimed.

Additionally, the email from the Democratic Whip’s office urged legislators to vote against H.R. 192, a bill introduced by Majority Whip Tom Emmer (R-Minn.) to prevent the Federal Reserve from issuing a central bank digital currency. The email contended that the bill’s definition of CBDCs is “excessively broad” and “raises apprehensions that the bill could impair the Fed’s capability to implement monetary policy.”

FIT21 has garnered backing from a coalition of digital asset organizations and firms, including Coinbase, Kraken, Andreessen Horowitz, and 50 others, who argue that it furnishes a regulatory framework for the digital assets sector, which the U.S. currently lacks.

The bill delineates criteria to determine whether a digital asset is a security or a commodity, extends the CFTC’s jurisdiction to register and oversee digital commodities, and mandates that the CFTC and SEC jointly promulgate regulations for assets that do not fall under other classifications.