US Capitol in Washington, DC
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Just as Wall Street and Main Street were excited to have crypto as a storehouse of new investment ideas and values, the speed at which cryptocurrencies entered the mainstream US market was to police decades ago. Many industries still call it the “Wild West” of finance, which has caused proportional insecurity to US regulators who only had the law.
But after months of research, industry talks, and bipartisan teamwork, Sens. Kirsten Gillibrand Cynthia Lummis said Tuesday that she was ready to debut the first major attempt to install guardrails in the early industry.
Their bill, entitled the Responsible Financial Innovation Act, represents a review of regulations that classify the majority of digital assets as commodities such as wheat, oil and steel. As a result, bipartisan law, as some would have expected, would delegate most of its supervisory responsibilities to the Commodity Futures Trading Commission rather than the Securities and Exchange Commission.
Gilibrand, a New York Democrat on the Senate Agricultural Commission, and Lumis, the first Republican member of the Wyoming Banking Commission, said the law was the culmination of months of cooperation between the House and Senate. Attempts to build a market for digital assets, with the important first long-awaited legal definition.
Their office will “integrate digital assets into existing legislation while creating a complete regulatory framework for digital assets that promotes responsible financial innovation, flexibility, transparency and strong consumer protection. A groundbreaking bipartisan law. ”
The point of the law is how to define the vast number of digital assets available to American investors and consumers.
With a few exceptions, the bill designates digital currencies as “sub-assets” or intangible alternative assets offered or sold in parallel with the purchase and sale of securities.
Gillibrand and Lummis staff explained that their law treats all digital assets as “auxiliary” unless they behave like securities issued by companies to attract investors to build a capital pool. did.
Cryptocurrencies and other digital coins are treated like traditional securities under the supervision of the SEC unless they give holders the privileges enjoyed by corporate investors, such as dividends, clearing rights, and the issuer’s monetary interest. It is not.
They added that the bill was the result of months of talks with Senators, including Republican minority leaders Mitch McConnell and Pat Toomey, and Democrats like Ron Wyden.
Democratic Party member Ro Khanna, who represents Silicon Valley, has also joined.
“My hometown of Wyoming has spent a very long time leading the country in digital asset regulation, and we want to bring that success to the federal level,” Lumis said in a press release. I am. “As the industry continues to grow, it’s important for Congress to carefully create legislation that promotes innovation while protecting consumers from malicious people.”
“The Lummis-Gillibrand framework provides clarity for both industry and regulatory agencies, while maintaining the flexibility to account for the continued evolution of the digital asset market,” Gillibrand added in the same release.
Together, the CFTC and SEC regulate a wide range of US markets and act as two powerful Wall Street watchers. The former oversees the buying and selling of raw commodities such as corn, coffee, gold and oil, and the latter oversees companies, executives and securities seeking public funding.
It’s up to Congress to decide how government agencies will crack down on the U.S. market, but the SEC and its chairman, Gary Gensler, have been holding a public crusade for over a year to uphold stricter cryptographic rules. I have led.
“Currently, there is insufficient investor protection for cryptocurrency financing, issuance, transactions, or lending.” Gensler told lawmakers in September.. “Frankly, at this point, it’s like the Archetypal Old West, which existed before the securities law was enacted, or the old world of” buyers beware. ” ”
Representatives of Lumis and Gillibrand said they spent weeks working with the SEC on their plans to remedy the concerns expressed by regulatory lawyers that the law would give up too much power. Told.
They also said that the fees collected from digital asset issuers play an important role in boosting the CFTC’s budget to undertake what is expected to be a flood of regulatory oversight.
Gillibrand and Lummis have experience working at the CFTC and SEC, respectively, but as of Tuesday morning it was unclear what agencies were thinking about the new law. Neither the CFTC nor the SEC responded immediately to CNBC’s request for comment.
Inputs from both institutions are important for US legal debate on how to define cryptocurrencies and other digital assets.
For example, the Gillibrand and Lummis bill defines a “digital asset” as a native electronic asset that grants economic or proprietary access or authority and includes cryptocurrencies and stablecoins for payment.
Cryptocurrencies are then defined as digital assets that are “mainly” used as a medium of exchange, a unit of account, or a valuable store and are not backed by the underlying financial assets.
These definitions, which often contain legal jargon, are of utmost concern to the world’s most powerful players in growing crypto lobbying, as they have a significant impact on how digital currencies are cracked down.
According to the Tech Transparency Project, the industry employs more than 200 employees and staff from the White House, Congress, the Federal Reserve, and political campaigns.Meanwhile, crypto executives Donated over $ 30 million According to documents kept by the Federal Election Commission, towards federal candidates and campaigns since the start of the 2020 election cycle.
Both Lummis and Gillibrand want to work with their peers to develop their respective states into blockchain and crypto shelters.
At the Empire State, New York City Mayor Eric Adams invested early paychecks in Bitcoin and Ether, and Bronx’s Democratic Democrat Richtores said in March that his city “to maintain cryptocurrencies. Should and must adopt cryptocurrencies. ” World financial capital. ”
Meanwhile, Wyoming edited the law in 2019 to create a new type of banking charter called a special purpose depository institution to accommodate cryptocurrency startups and trading platforms, diversifying into finance and coal. gas.
Staff from both senators will call reporters a key feature of the bill, including certain tax exemptions that will prevent stablecoin holders from having to report changes in income each time they make a purchase in digital currency. I advertised it.
These disclosures inform investors about the issuer’s experience in developing digital assets, the issuer’s previous asset price history, expected costs, and each issuer’s management team and liability description.
Officials described the bill as a combination of opinions from politicians on both sides of the political passage, but due to its size and complexity, lawmakers could split the bill and try to pass its components one by one. I admitted that I had sex.