U.S. Senators Lummis and Gillibrand Finalize Cryptocurrency Bill
takyon writes:
Bipartisan crypto overhaul seeks to treat most digital assets as commodities and empower CFTC
As excited as Wall Street and Main Street were to have crypto as a new investment idea and store of value, the speed at which cryptocurrencies entered mainstream U.S. markets caused proportionate angst for U.S. regulators, who were equipped only with decades-old securities laws to police an industry many still refer to as the financial "Wild West."
But after months of research, industry consultation and bipartisan teamwork, Sens. Kirsten Gillibrand and Cynthia Lummis said Tuesday that they are ready to debut the first major attempt to place guardrails around the nascent industry.
Their bill, titled the Responsible Financial Innovation Act, amounts to a regulatory overhaul that would classify the vast majority of digital assets as commodities like wheat, oil or steel. As such, the bipartisan legislation would also leave the bulk of the oversight responsibility to the Commodity Futures Trading Commission and not the Securities and Exchange Commission, as some had expected.
Crucially, the bill treats all cryptocurrencies, including Bitcoin and Ethereum, as "ancillary assets" unless they behave like a security that a company might issue to pool capital - provide dividends, liquidation rights, or a financial interest in the issuer. On a similar note, the bill defines a digital asset as a natively electronic asset that offers economic or proprietary access rights. Similarly, a virtual currency is defined as a digital asset that is used primarily as a medium of exchange, unit of account, or a store of value, and is not backed by any underlying financial asset.
Thirdly, it appears that the legislation will not ban non-custodial or self-hosted crypto wallets. Finally, the bill mandates 100 percent backing for stablecoins. This is an important aspect of the legislation, given the bulwark status that stablecoins enjoy in the crypto world, and necessitated by the recent high-profile failure of Terra's algorithmic UST stablecoin. Of course, a strong stablecoin segment will allow investors to transact much more safely and conveniently with Bitcoin, Ethereum, and other cryptocurrencies.
Also at The Washington Post.
See also: Crypto lobbying hits fever pitch as Bitcoin's favorite senator finishes bill
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