U.S. lawmakers unveiled a digital assets bill aimed at addressing the crypto industry's concerns over hostile regulations. However, legal experts caution that the bill's vague language, particularly a provision related to DeFi, might not deter the SEC's stringent approach to crypto enforcement. The bill, known as the Financial Innovation and Technology for the 21st Century Act, seeks to rectify the shortcomings of the current regulatory landscape. Sponsored by House Republicans including Glenn Thompson, French Hill, and Dusty Johnson, the legislation introduces new definitions for digital assets, provides exemptions, and establishes registration procedures for cryptocurrency exchanges with the SEC and CFTC. One key concern is the bill's potential impact on the DeFi market. According to Gabriel Shapiro, general counsel for Delphi Labs, the bill's language around exemptions for securities could leave DeFi assets vulnerable to SEC scrutiny. Liquidity staked tokens and similar assets might be labeled as securities, effectively creating a backdoor DeFi prohibition. The recent draft of the bill introduces changes regarding when a token is considered a security or commodity. Tokens sold as part of an investment contract will not immediately qualify as securities, a departure from the previous version. This change is seen as an attempt to align the bill with a recent court ruling in favor of Ripple Labs, where XRP tokens were not considered securities except when sold to institutions. SEC Chairman Gary Gensler's claims that many crypto projects violate regulations and the lack of clear registration guidelines have been contentious points. The bill seeks to address this by establishing a registration standard based on the legal definition of "decentralization." However, critics argue that this could still leave room for ambiguity and subjective determinations by the SEC. Despite the bill's attempt to bring regulatory clarity, House Agriculture Committee Democrats remain skeptical. They view the legislation as too favorable to the crypto industry and worry about potential undermining of the SEC's authority. Democrats have also pointed to FTX, a failed crypto exchange, as an example, emphasizing the need for bipartisan support in passing comprehensive digital asset legislation. Experts in the field, like Billy Sebell, executive director of the XDC Foundation, express concerns that the bill may introduce more ambiguity rather than bringing clarity to the crypto space. While some welcome the attempt to provide legal definitions, others fear it might not be enough to address the industry's challenges. In conclusion, the House crypto bill aims to improve the regulatory environment for digital assets, but its vague language and potential impact on DeFi have raised concerns among legal experts. The bill's fate remains uncertain, with political obstacles to overcome before it becomes law. Whether it can strike a balance between protecting investors and fostering innovation in the crypto industry remains to be seen.