On Tuesday, June 7, 2022, Cynthia Loomis, a Republican senator and rancher from Wyoming, and Kirsten Gillibrand, a Democrat senator and securities attorney from Albany, New York, will introduce the Responsible Financial Innovation Act. The bill is a broad, comprehensive effort to regulate bitcoin and other cryptocurrencies.
In the words of Loomis, the bill would “fully integrate digital assets”. [the] financial system” and bring order to the crypto space.
This is no small feat and it took several hours of consultation with industry and mining representatives to create the law, which Loomis says “we hope hits the sweet spot between regulation that is clear and understandable.” Comes and doesn’t stop innovation.”
“We can’t overregulate,” says Loomis. “If we overregulate, it [Bitcoin innovation] Will go to other countries.”
The legislation would clarify the roles of two existing regulators, the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), and make it clear that miners are exempt from being broker-dealers.
The law builds on top of the existing regulatory regime for assets without creating any more regulatory bodies.
“Even the regulators are waiting for our legislation to move forward,” Loomis says. They believe they want as much clarity as possible.
Clearing up the messiness of the current cryptocurrency law
Part of the new bill’s mission is to clean up the existing mishmash of bills and legislation (more than 50) that apply to cryptocurrencies, including parts of the Infrastructure Investment and Jobs Act passed last year.
As noted here, “Washington’s efforts to oversee digital assets date back to the time of the Obama administration, but have been full of scarcity, holes, and overlapping jurisdictions.”
No new agency: SEC and CFTC to remain in charge
Despite recent media coverage suggesting that there would be a new advisory body to guide and oversee the legislation, Senator Lumis’ office assured bitcoin magazine That there are no new agencies in the bill.
According to a report in coindesk,
“The bill would lean on the Commodity Futures Trading Commission (CFTC) as the primary regulator for spot markets and futures, while leaving the Securities and Exchange Commission (SEC) as the supervisor of crypto as defined by the so-called Howe test. as – specifically, an asset ‘being offered to fund a company in the same way as stock is offered to fund companies'”.
A report on the draft law also sees a more expanded role for the CFTC:
“Some details remain in flux, but at a higher level the senators’ plan would give the Commodity Futures Trading Commission significantly more power than it currently is. The regulator will directly oversee trading in tokens that meet the definition of a commodity, such as Bitcoin, the world’s largest cryptocurrency, currently has jurisdiction mainly associated with derivatives.
“Meanwhile, the Securities and Exchange Commission will police coins that are used to raise money from the public like stock offerings. It is unclear whether these turf lines will satisfy some crypto diehards who are heavy investors of the SEC. Want to free the asset class from the reach of security.
The law would also exempt people from reporting and paying taxes when making purchases using cryptocurrency if their resulting capital gain is $600 or less. Some argue that actually using bitcoin to pay at the checkout counter would make it more attractive.
Mining is included under the new bill
As noted in his interview, Loomis has indicated that the legislation will be deferred to states on how they will regulate bitcoin mining. She praises the way in which miners can help stabilize the grid by using wasted assets and turning them into productive assets.
Added in response to a recent White House statement bitcoin magazine, Senator Loomis shared,
“Digital asset miners are some of the most innovative players in this field. In my home state of Wyoming, we have miners hooking up their rigs to natural gas flames to harness the energy that often flares up in the atmosphere. Is.
“Others are using solar and wind power to power their operations. I would urge the White House to approach this carefully so as not to stifle innovation with unnecessary regulations.
stable coins included
According to Loomis, the bill will significantly increase oversight of tokens and stablecoins. “Stablecoins must either be FDIC insured or backed by more than 100% of hard assets.”
“This is a very comprehensive bill, it will be filed on June 7th,” Loomis said in a recent interview. “This includes coins that are commodities, coins that are securities, this includes stablecoins, it includes discussions about CBDCs. [central bank digital currencies]This is in line with what we heard earlier and a small nod to NFTs [non-fungible tokens],
Following the recent Terra Luna meltdown, interest in regulating stablecoins has grown as both senators are well aware. “All the volatility in the market has reaffirmed why our regulatory framework is the best,” Gillibrand said of the bill, “indeed, it emphasized the importance of doing it now.”
Most reports of the new law don’t see it passing through Congress before next year. There are at least three congressional committees that must review the bill before it can go to Congress as a whole. With Congressional elections approaching this November, many members of Congress may be reluctant to land in the region before moving to their constituencies.
One “optimistic” Senator Gillibrand said coindesk“He is expected to get a Senate vote ‘next year at the latest’.”