Cryptocurrency regulations may soon become codified in law as a bipartisan group of U.S. Senators is preparing to introduce legislation that would treat most digital assets as commodities under CFTC oversight.
Sens. Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) introduced the first major bipartisan legislation that intends to tame the “Wild West” crypto market on Tuesday. This legislation would treat digital assets like commodities, similar to how wheat or oil are regulated, and empower the Commodity Futures Trading Commission to rein in the burgeoning digital currency industry.
Gillibrand, a progressive Democrat who sits on the Senate Agriculture Committee, and Lummis, a first-term Republican serving on the Banking Committee, both articulated their appreciation that the Responsible Financial Innovation Act is the culmination of several months of bipartisan collaboration in both chambers of Congress.
The senators said that this legislation represents a critical first attempt to structure the markets for digital assets with long-awaited legal definitions, CNBC reported.
The senators’ office touted the bill as “landmark bipartisan legislation that will create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law.”
The legislation’s cornerstone is the way in which it defines the vast number of digital assets that are available to American investors and consumers.
With very few exceptions, the bill defines digital currencies as “ancillary assets,” or intangible, fungible assets that are offered or sold in tandem with a purchase and sale of a security.
People close to Gillibrand and Lummis said that this proposed legislation will treat all digital assets as “ancillary” unless they behave like a security that a corporation would issue to investors to build further capital.
This legislation also makes it so that cryptocurrencies and other digital tokens won’t be treated like traditional securities under the Securities and Exchange Commission’s scrutiny unless the individual holding cryptocurrency is entitled to the privileges and benefits that are granted to corporate investors such as dividends, liquidation rights, or a financial interest in the issuing entity.
In a press release, Lummis said, “My home state of Wyoming has gone to great lengths to lead the nation in digital asset regulation, and I want to bring that success to the federal level. As this industry continues to grow, it is critical that Congress carefully crafts legislation that promotes innovation while protecting the consumer against bad actors.”
Gillibrand said that the bill would “provide clarity to both industry and regulators, while also maintaining the flexibility to account for the ongoing evolution of the digital assets market.”
On Monday, the British government announced its plans to move forward with minting its own non-fungible tokens (NFT) as it attempts to become a "world leader" in the cryptocurrency space in the global economy.
British Finance Minister Rishi Sunak asked the Royal Mint — the entity responsible for the manufacture of the United Kingdom's currency — to create and issue the NFT "by the summer," CNBC reported.
The United Kingdom's NFT initiative is the British government's attempt to "lead the way" in crypto, according to City Minister John Glen.
Glen stated that there are a number of regulatory steps the U.K. plans to introduce to bring digital assets — like NFTs and Bitcoin — scrutiny.
These include:
Glen said, "We shouldn't be thinking of regulation as a static, rigid thing. Instead, we should be thinking in terms of regulatory 'code' — like computer code — which we refine and rewrite when we need to."
He also said that the British government was "widening" its gaze to look at introducing more diverse regulations on the ever-expanding world of cryptocurrency, including the burgeoning Web3 movement, which would establish a more decentralized global internet that is powered and regulated through blockchain technology.
"No one knows for sure yet how Web3 is going to look," Glen said. "But there's every chance that blockchain is going to be integral to its development. We want this country to be there leading from the front, seeking out the greatest economic opportunities."
Similarly, across the pond, the American federal government is continuing to move forward with the development of a central bank digital currency — fully digitizing the U.S. dollar — and preparing to regulate the cryptocurrency holdings of the American public.
In an era with historic levels of regulation, the wages and savings of the American people are constantly losing value, and storing money in a savings account with a sub-1% interest rate is becoming less appealing to more and more people. So naturally, they're looking for a more secure alternative other than storing cash under their mattresses.
There are currently trillions of dollars invested in cryptocurrencies for these very reasons, and the more that government tries to regulate them, the less appealing they become to potential investors.
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