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Senators introduce bipartisan comprehensive bill to regulate cryptocurrencies

GOP Sen. Cynthia Lummis and Democratic Sen. Kirsten Gillibrand say the legislation is needed to demystify the growing industry for skeptical Americans.
Key Speakers At DC Blockchain Summit
Sen. Cynthia Lummis, R-Wyo., speaks as Sen. Kirsten Gillibrand, D-N.Y., listens at the DC Blockchain Summit in Washington, D.C., on May 24. Valerie Pleasch / Bloomberg via Getty Images

WASHINGTON — The most comprehensive cryptocurrency legislation to date is being introduced Tuesday by a bipartisan pair of senators looking to establish a clear federal regulatory structure for digital assets.

Sens. Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y. — authors of the Responsible Financial Innovation Act — say their goal is to make consumers more comfortable with a growing industry that is still foreign to many Americans.

“One of the problems is that nothing is properly defined,” Lummis, a fervent cryptocurrency supporter on Capitol Hill who owns bitcoin, said in an interview. “Our bill seeks to change that so more people become comfortable and can benefit from cryptocurrency.”

Key provisions in the legislation would, for the first time, define the blockchain and digital asset industries and designate the Commodity Futures Trading Commission as the regulatory agency with spot market jurisdiction over all fungible digital assets that are not securities.

The Commodity Futures Trading Commission and the Securities and Exchange Commission have clashed in recent years over which agency should regulate cryptocurrencies and digital assets.

The legislation would spell out definitions for digital assets, virtual currencies, payment stablecoins and so-called smart contracts, in addition to detailing new tax implications for cryptocurrency users.

“The bill is ambitious in its scope and shows that the senators have engaged with the crypto community to understand the pain points in the industry where regulation and innovation intersect,” said Agnes Gambill, a visiting senior research fellow at George Mason University’s Mercatus Center specializing in decentralized finance.

“The industry should be regulated to protect consumers from fraud. However, at the same time we need to be careful not to stifle innovation,” Gambill said.

In the wake of increased fraud and scams plaguing consumers of cryptocurrencies, Treasury Secretary Janet Yellen called for “new regulation” of the industry at a House hearing last month. In March, President Joe Biden signed an executive order that bolstered protections for consumers and funded research for digital assets.

“Digital assets, blockchain technology and cryptocurrencies have experienced tremendous growth in the past few years and offer substantial potential benefits if harnessed correctly,” Gillibrand said in a statement. “It is critical that the United States play a leading role in developing policy to regulate new financial products, while also encouraging innovation and protecting consumers.”

According to an NBC News poll from March, 21 percent of U.S. adults have either traded or used cryptocurrencies, up from 10 percent the previous year.

The two senators, who said they were flooded with proposals from industry players vying for input on the legislation, plan to promote their bill at the Consensus 2022 cryptocurrency conference in Austin, Texas, this week. They also hope to get more lawmakers to co-sponsor their legislation.