Key US Senators present Crypto Bill defining comprehensive approach for Future Rules

Key US Senators present Crypto Bill defining comprehensive approach for Future Rules

 

A far-reaching, bilateral cryptocurrency bill was presented on Tuesday by U.S. Senators. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.), are looking to extend a comprehensive set of protocols across digital assets in the U.S.A and have given industry campaigners something substantial to debate.

 

Their crypto bill would free small-scale trade of goods and services from the swamp of tax insinuations by making transactions of less than $200 tax-free, possibly clearing a path for a digital currency that functions more like a currency. And, as anticipated, the legislation would allow new authorities and a strong presence in the Commodity Futures Trading Commission.

 

The legislation tries to tackle the toughest questions hanging over digital assets. It would set new federal regulations for stablecoins, taxes on small-scale payments and the authorities of officials – clarifying the uncertainties that have put a hold on the cryptocurrency space from maturing.

 

 

However, the effort by Lummis and Gillibrand is perceived in Washington as a starting point for a discussion that won’t result in anything significant before next year. It joins several bills, presented in past, that mostly pursued to bite off narrow bits of the Digital Currency landscape, such as the recent push for stablecoin guidelines by Sen. Pat Toomey (R-Pa.). It even borrows from some of that work.

 

Despite this, the bill would likely have to split into several pieces in 2023 as it gusts through congressional committees in the next session. With Lummis seated on the Senate Banking Committee that oversees the Securities and Exchange Commission and Gillibrand holding a spot on the Agriculture Committee that oversees commodities and the CFTC, the legislators are well placed to assist shepherd key portions of the legislation.

 

Their “Responsible Financial Innovation Act” forms regulatory clarity for agencies responsible for supervising digital asset markets, provides a strong regulatory outline for stablecoins and integrates digital currencies into our existing tax and banking laws,” Lummis said.

 

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These are some of the main structures of what Gillibrand described as a “landmark bill” that “will provide clarity to both industry and regulators, while also maintaining the flexibility to account for the ongoing evolution of the digital assets market”

• It would outline the terrain between digital securities and commodities, allowing issuers to know early what they are launching based on the “purpose of the asset and the rights or powers it conveys to the consumer.”  The market planned in the bill is dominated by commodities, including most of the big names in cryptocurrency, such as Bitcoin (BTC), Ethereum (ETH) and dozens of the other coins with a significant market share that would fall into a definition as “ancillary assets” overseen by the CFTC.
• The regulators would give the CFTC authority over the spot markets in cryptocurrency commodities, as sought by the agency chief Rostin Behnam.
• The bill also gives “legal clarity” on how to handle customer holdings after the recent furore over customers’ digital currency getting roped in with an exchange’s assets in the event the firm goes bankrupt – a worry that erupted after cryptocurrency exchange Coinbase (COIN) suggested it as a possibility in a recent SEC filing. The Biden administration has gestured it wants better custody arrangements in any cryptocurrency bills moving through Congress.
• The Lummis-Gillibrand bill also adopts language from a bill last year that sought to clarify the meaning of a cryptocurrency broker, hoping to safeguard wallet providers, software developers and others from being caught by certain tax reporting requirements.
• The bill does not set up the self-regulatory organization that many in the industry have pushed for, but it demands a study from the SEC and CFTC and a proposal for starting one.
• According to the bill, Cryptocurrency operators, watched by the CFTC would have to pay fees to fund the agency, similar to the model that now supports the SEC.
• The senators also recommend an industry “sandbox” in which lawmakers allow digital currency firms to test new products on a limited scale and duration.
• Considering the recent, dramatic collapse of Luna and TerraUSD (UST), one closely examined aspect of the bill will be its move toward “100% reserve, asset type and detailed disclosure requirements for all payment stablecoin issuers.” There would be a new outline for banks and credit unions to issue stablecoins, but issuers wouldn’t have to become depository institutions. The regulators insist that “existing stablecoin issuers and new entrants into the market have an adequate opportunity to compete with existing banks and credit unions.”

 

Also Read: PayPal Now Allows The Transfer Of Digital Currencies To External Wallets 

 

The bill necessitates certain disclosures to the SEC from companies that raise funds through the sale of Digital Assets. This would ensure “that market participant and our securities regulatory community receive detailed and accurate disclosures about those digital assets that are widely traded, but in a manner that encourages innovation," said Lewis Cohen, co-founder of Dlx Law, a crypto lobbying firm.