- Meaning. Kirsten Gillibrand, D-NY, and Cynthia Lummis, R-WY, unveiled a bipartisan crypto bill Tuesday which aims to provide space with a complete regulatory framework.
- The Responsible Financial Innovation Act addresses regulatory requirements for stablecoin issuers and taxes on crypto transactions. It also offers clarification on which digital assets would be commodities versus securities.
- If passed, the legislation would expand the role of the Commodity Futures Trading Commission (CFTC) to regulate digital asset spot markets and limit the Securities and Exchange Commission (SEC) to overseeing crypto that it classifies as securities.
Overview of the dive:
Crypto oversight has been front and center for lawmakers, regulators, and digital asset professionals for months.
The Financial Accounting Standards Board (FASB) unanimously agreed in May to move forward with prioritizing a project to improve the accounting and disclosure of certain digital assets. Earlier, the SEC issued guidance stating that companies should disclose to investors the risks associated with cryptocurrencies held on behalf of clients and account for assets as liabilities.
Several crypto executives who testified on Capitol Hill in December said the United States’ approach to regulating the space will determine the nation’s status as a leader in the space.
CFTC Chair Rostin Behnam urged lawmakers at a hearing in February to give the agency an expanded role in regulating the cryptocurrency market and give the regulator an additional $100 million to do so.
Meanwhile, companies in Coinbase to Ripple have come up with their own preferred frameworks for crypto regulation – with Ripple, for its part, leaning towards the CFTCand Coinbase seeking the establishment of a new regulator altogether.
Stablecoin regulation has become a hot issue more recently after the TerraUSD price crash made headlines in May. Treasury Secretary Janet Yellen later that month called for stricter monitoring of stablecoins during a hearing before the Senate Banking Committee, during which Lummis serves.
Lummis and Gillibrand’s bill aims to spur innovation and transparency while promoting consumer protection in the digital asset space, senators said Tuesday in an average job.
The bill alsocreates regulatory clarity for agencies tasked with overseeing digital asset markets, provides a robust and responsive regulatory framework for stablecoinsand integrates digital assets into our existing tax and banking laws,” Lummis said in A press release.
The bill would require stablecoin issuers to maintain 100% dollar reserves and for the Treasury Department to implement final stablecoin guidance no later than 120 days after the legislation is passed.
The framework would also save investors from having to pay capital gains taxes when using digital assets in transactions of up to $200, further bolstering the use case for crypto as a means of trading. ‘exchange.
The bill would also save money for crypto miners, who would not be required to pay income tax until they exchange their newly mined assets for cash.
Perhaps the biggest impact of the bill would be to overhaul the government’s treatment of digital assets as securities or assets. The bill would treat Bitcoin, Ethereum, and several other popular cryptocurrencies as CFTC-regulated commodities rather than SEC-regulated securities.
“Digital assets, blockchain technology and cryptocurrencies have seen phenomenal growth over the past few years and offer substantial potential benefits if properly leveraged,” said Gillibrand, who sits on the Senate Agriculture Committee which oversees the CFTC. “It’s critical that the United States take a leadership role in developing policy to regulate new financial products, while encouraging innovation and protecting consumers.”
Lummis and Gillibrand have planned to create a regulatory framework for crypto as early as March 2020. Prospects for it to pass through the Senate, especially before the midterm elections in November, are quite dim, csaid ongressional aides. But it could spur conversations and compromises.
This is not the only bill attempting to define regulation in crypto. Leaders of the Senate Agriculture Committee are also working on a framework that would give the CFTC oversight of digital assets that are not securities, The Wall Street Journal reported.
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