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Sens. Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-Wyo.) have introduced a pro-cryptocurrency regulatory bill. This is the first major bipartisan proposal for regulation of the crypto space.
The bill, which most note is friendly to the industry, was introduced on June 7.
Here are 7 things to know.
The two senators want the government to treat bitcoin, ethereum and other cryptocurrencies like commodities such as wheat or aluminum, instead of as securities.
If cryptocurrencies are considered commodities, that would place most of them under the jurisdiction of the Commodities Future Trading Commission instead of the Securities and Exchange Commission. The SEC has argued that the digital coins should be treated as securities, The New York Post reported.
The Commodity Futures Trading Commission regulates the U.S. derivatives markets, which include futures, swaps, and certain kinds of options.
Others like Gillibrand and Lummis feel that digital coins should be treated as commodities.
In a press release, Gillibrand stated that the proposal will “establish a regulatory framework that spurs innovation, develops clear standards, defines appropriate jurisdictional boundaries, and protects consumers.”
There are those who argue that Gillibrand and Lummis have it wrong and believe crypto should be considered securities.
The SEC chair, Gary Gensler, has argued that “most digital assets in the roughly $1.2 trillion market qualify as securities, similar to stock in publicly traded companies, giving his agency the responsibility to police them and their issuers,” The New York Post reported.
The bill is called the Responsible Financial Innovation Act. The legislation would make tweaks to crypto-related law, including removing a requirement that crypto traders report gains or losses of less than $200 to the Internal Revenue Service.
The bill will probably face opposition from “crypto-skeptical” members of Congress, including Sens. Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio). It is unlikely to pass ahead of the midterms.
“This legislation would do quite a bit to undermine existing securities laws by creating an alternative route that could bypass the current, time-tested rules,” Mark Hays, a senior policy analyst with the progressive group Americans for Financial Reform, told the Wall Street Journal.
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Crypto billionaires have been getting more involved in political campaigns.
For example, Sam Bankman-Fried, founder of cryptocurrency exchange FTX, was one of Joe Biden’s largest donors in the 2020 presidential election. He’s also heavily donated to Democratic candidates in this year’s midterm elections. Pro-cryptocurrency Republican Blake Masters received hundreds of thousands of dollars through bitcoin donations and NFT sales in his Arizona senate campaign.
Lummis is a big investor in bitcoin, and reported owning between $100,000 and $250,000 worth of the cryptocurrency in her 2022 financial disclosures, The New York Times reported.
Futures contracts for bitcoin and ethereum are already regulated by the CFTC and the new bill would expand the agency’s power as it will now be handing it oversight of the crypto spot market if the proposal is successful. The legislation would create a process for crypto trading platforms such as Coinbase to register with the CFTC.
“The United States is the global financial leader, and to ensure the next generation of Americans enjoys greater opportunity, it is critical to integrate digital assets into existing law and to harness the efficiency and transparency of this asset class while addressing risk,” Lummis said in a statement.
Gillibrand added that the bill “will establish a regulatory framework that spurs innovation, develops clear standards, defines appropriate jurisdictional boundaries and protects consumers,” The Washington Post reported.
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