Key Senators in The United States have Introduced A Crypto Bill That lays Out A Broad Plan For Future Regulations.
Kirsten Gillibrand and Cynthia Lummis have finally released a long-awaited plan that helps the CFTC do its job as a watchdog and gets rid of tax worries when people buy things with bitcoins.
Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced a broad, bipartisan crypto bill on Tuesday, aiming to extend a complete set of laws across digital assets in the United States and giving business lobbyists something to fight.
Their initiative would exempt small-scale purchases of goods and services from taxation by making all transactions under $200 tax-free, perhaps paving the way for a cryptocurrency that functions more like a currency. As expected, the law would also give the Commodity Futures Trading Commission more power and a bigger role.
The far-reaching law aims to address the most pressing issues around digital assets. It would also set up new federal laws for stablecoins, small-scale payment taxes, and regulatory authorities. This would get rid of the uncertainty that has kept the young financial sector from growing.
Lummis and Gillibrand’s initiative, on the other hand, is considered in Washington as a beginning point for a conversation that won’t result in anything meaningful until next year. It joins numerous earlier pieces of legislation that aimed to take off little portions of the cryptocurrency environment, such as Senator Pat Toomey’s recent campaign for stablecoin laws (R-Pa.). Some of that work is even referenced.
Even so, as it works its way through congressional committees in the coming session, the effort is expected to be split into many components in 2023. Lummis is on the Senate Banking Committee, which has control over the Securities and Exchange Commission, and Gillibrand is on the Senate Agriculture Committee, which has control over commodities and the CFTC. Both of them are in a great position to help steer important parts of the bill.
According to Lummis, their “Responsible Financial Innovation Act” “creates regulatory clarity for authorities involved with overseeing digital asset markets; provides a solid, specialised regulatory framework for stablecoins; and integrates digital assets into our existing tax and banking legislation.”
These are some of the key components of what Gillibrand called a “landmark measure” that “would offer clarity to both industry and regulators while also keeping flexibility to accommodate the continued growth of the digital assets market”:
It would draw a line between cryptocurrency securities and commodities, allowing token issuers to know what they’re getting into ahead of time—based on the “purpose of the asset and the rights or powers it transmits to the consumer.” The bill’s market is dominated by commodities, which include Bitcoin, Ethereum, and dozens of other tokens with a big share of the market that the CFTC would call “ancillary assets.”
•As requested by agency chief Rostin Behnam, the lawmakers would give the Commodity Futures Trading Commission power over the spot markets in crypto commodities. This would give the government watchdog significant new power over cash markets, which it currently lacks.
• It also provides “needed legal clarity” on how to handle customer holdings, following the recent uproar over customers’ tokens being merged with an exchange’s assets in the event the company goes bankrupt – a concern that arose after Coinbase (COIN) mentioned it in a recent Securities and Exchange Commission filing. Any crypto measures moving through Congress should include better custody provisions, according to the Biden administration.
• The Lummis-Gillibrand bill also incorporates language from a bill introduced last year by Rep. Patrick Henry and others to define the definition of a cryptocurrency broker, with the goal of protecting wallet providers, software developers, and others from tax reporting requirements.
• While the law does not establish the self-regulatory organization (SRO) that many in the industry have advocated for, it does require a review by the SEC and CFTC, as well as a proposal for its establishment.
•Under this measure, crypto operations monitored by the CFTC would be required to begin paying fees to fund the agency, similar to how the SEC is funded presently.
• The senators also propose an industry “sandbox,” in which regulators would allow cryptocurrency companies to develop new products on a limited scale and for a limited time.
• In light of the recent, spectacular collapse of TerraUSD (UST), the bill’s shift toward “100% reserve, asset type, and full disclosure requirements for all payment stablecoin issuers” will be closely scrutinized. Under a new structure, banks and credit unions would be permitted to produce stablecoins, but they would not have to become depository institutions. The legislators believe that “current stablecoin issuers and future entrants into the market have an ample opportunity to compete with existing banks and credit unions.”
The law also mandates that corporations collecting funds through digital asset sales make certain disclosures to the SEC. Lewis Cohen, the co-founder of Dlx Law, said that the strategy would make sure that “market participants and our securities regulatory community get full and accurate disclosures about those digital assets that are widely traded, but in a way that encourages innovation.”