around the world, regulators are trying to tackle the elephant in the trillion dollar room: the digital asset market. As crypto is an emerging industry that currently largely exists outside legal frameworks, it is still in murky waters, and those in the industry – and beyond – seemingly want clear guidance and clarity to move forward.
A proposed crypto bill sponsored by US Senators Cynthia Lummis, Republican of Wyoming, and Kirsten Gillibrand, Democrat of New York, aims to install guide rails around the digital asset space. The 69-page bipartisan bill is comprehensive and targets many corners of the crypto markets.
Some of the most notable aspects of the proposal include:
“This bill tries to do everything, which is perhaps the biggest impediment.” Christopher LaVigne, co-chair of crypto practice, Withers
- Carry out crypto transactions that are $200 or less tax-free.
- Define guidelines for distinguishing cryptocurrencies as commodities or securities (most would fall under the category of commodities under the bill).
- Supporting stablecoins with a 1:1 monetary currency, moving towards “100% reserve, asset type and detailed disclosure requirements for all stablecoin issuers.”
- Granting the US Commodity Futures Trading Commission exclusive spot market jurisdiction over cryptocurrencies defined as commodities.
- The U.S. Securities and Exchange Commission and CFTC mark as the primary watchdogs over the digital asset industry.
“The bill is important because it is a step in the right direction for legislation and definition of ‘crypto,’ what a ‘crypto asset’ is and what regulation will look like,” said Nick Donarski, the founder and CTO of ORE System, to Vidak For Congress.
“But at the same time, like other crypto-related bills, the bill would be more likely to be split in order to gain enough support to get it passed.”
Giving Power to the CFTC
“There’s a lot of color here and it’s quite exciting,” Ken Goodwin, director of regulatory and institutional affairs at Blockchain Intelligence Group, told Vidak For Congress. By making the CFTC oversee most digital assets, it sets a precedent and gives the agency more validation, he said.
Goodwin worked on Wall Street for over 20 years and has spent the past eight years in the blockchain space. Even with his background in both traditional finance and crypto, he said he was surprised by the CFTC’s positioning in the proposed bill.
“I would never suspect” [CFTC] actually lead the way in this; I thought the SEC would be the regulator for this,” Goodwin said. “Even if this bill doesn’t pass, people will look to the CFTC for advice.”