Sens. Kirsten Gillibrand and Cynthia Lummis announced Tuesday that they are ready to unveil a new regulatory mechanism for reigning in the wild west that is cryptocurrency.
The bill they introduced, the Responsible Financial Innovation Act, will classify a majority of digital assets as commodities, similar to wheat, steel, or oil. This would place crypto under the oversight of the Commodity Futures Trading Commission, rather than the Securities and Exchange Commission.
They have called the bill “landmark bipartisan legislation that will create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law.”
The legislation will define the vast majority of digital currencies as “ancillary assets,” or intangible, fungible assets offered or sold in tandem with a purchase and sale of a security. All digital assets will be treated as ancillary unless they behave as if a security a corporation would issue to attract investors.
Unless a cryptocurrency entitles a holder to privileges like dividends, liquidation rights, or a financial interests in the issuer, such as are enjoyed by corporate investors, the digital coins will not be treated like traditional securities.
Sen Cynthia Lummis said in a press release, “My home state of Wyoming has gone to great lengths to lead the nation in digital asset regulation, and I want to bring that success to the federal level. As this industry continues to grow, it is critical that Congress carefully crafts legislation that promotes innovation while protecting the consumer against bad actors.”
Sen Gillibrand went on in the same release, “The Lummis-Gillibrand framework will provide clarity to both industry and regulators, while also maintaining the flexibility to account for the ongoing evolution of the digital assets market.”
Lummis and Gillibrand worked with the SEC’s attorneys, spending weeks attempting to remedy concerns the legislation would cede too much power. They also note, fees collected from digital asset issuers will be of immense use in bolstering the CFTC’s budget as it takes on monumental levels of regulatory oversight.
Staff for the Senators have highlighted features of the bill, such as tax exemptions that will shield stablecoin holders from having to report income changes each time they make a purchase with digital currency.
The staffers do concede that due to the complexity and size of the bill, it will most likely have to be broken up into components which will be passed individually.
So far, neither the SEC nor CFTC have commented on the new legislation.
