The Financial Revolutionist

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What’s in the bipartisan Senate bill on crypto?

Senators Cynthia Lummis (R., WY) and Kirsten Gillibrand (D., NY) introduced a bill called the Responsible Financial Innovation Act, which proposes a “complete regulatory framework for digital assets.”

Why should we care?
The bill is unlikely to be discussed and passed in a Democrat-controlled Senate, but it highlights the success of crypto lobbyists in writing favorable legislation—and, possibly, eventually seeing pro-crypto laws passed at the federal level. Among other details, the bipartisan bill would exempt certain cryptocurrencies from securities regulations (avoiding future crackdowns by the SEC), encourage a FINRA-like mechanism for self-regulation within the crypto industry, and protect small crypto payments from capital gains taxation. Instead of being classified as securities, big players like bitcoin and ether would be considered commodities, and would be regulated by the Commodity Futures Trading Commission. To Mark Hays, a Senior Policy Analyst on Fintech at Americans for Financial Reform, this would ultimately harm everyday people who use crypto as an investment vehicle. “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,” he said. It’s worth paying attention to how the public—as well as other regulators—react to this proposed legislation. Lummis is a pro-crypto lawmaker and holds between $100,000 and $250,000 in cryptocurrency (a large range caused in part by crypto’s wild volatility). Gillibrand of New York, meanwhile, who previously ran for President, may face backlash from her constituents, especially as New York State begins to pass tighter laws regulating crypto. Whatever the ultimate result, the bill signals the crypto industry’s considerable political power, and suggests Gary Gensler’s more stringent vision for the industry might not survive.