The New Crypto Legislation Congress Is Debating
By: James Flippin · June 08, 2022 · Reading Time: 3 minutes
The Responsible Financial Innovation Act was introduced yesterday in the Senate. It’s the first major attempt to regulate cryptocurrencies and other digital assets. Lawmakers say the bill would provide a regulatory framework and promote transparency.
In a broad sense, the legislation aims to classify coins and tokens as commodities like wheat or oil. Digital currencies would be considered “ancillary assets.” That would empower the Commodity Futures Trading Commission to have regulatory oversight.
SEC and Fees
The SEC has called for more crypto regulation in recent years, but may have a reduced role if the bill passes. Digital coins would only fall under SEC scrutiny when certain conditions are met. These include coins offering dividends, liquidation rights, and stock privileges.
The legislation attempts to define “digital assets” as those used “primarily” as a medium of exchange. The bill’s language mentions both virtual currency and payment stablecoins. Fees collected from issuing companies would offset the added regulatory costs.
During a conference call, Congressional staff members attempted to overcome some potential objections. For example, stablecoin users would receive an exemption, and would not be required to report changes in income following each use of digital currency.
Those same staffers explain the bill is large and complex and includes input from both sides of the aisle. Some pundits expect lawmakers to break up the legislation and take a piece-meal approach. That may represent a better approach anyway given the multifaceted nature of digital assets.
In March President Joe Biden signed an executive order aimed at addressing crypto regulatory gaps. If this bill passes the Senate it would head to the House of Representatives and then to Biden’s desk. At a time of uncertainty for many on Wall Street, some crypto clarity may be on the way.
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