Gillibrand, a Democrat from New York, is a member of the Agriculture Committee, and Lummis, a Republican from Wyoming, sits on the Senate Banking Committee. Those committees oversee the Commodity Futures Trading Commission (CFTC) and U.S. Securities and Exchange Commission (SEC), respectively, according to the bill's announcement.
The nearly 70-page bill, which has been dubbed the Responsible Financial Innovation Act, also known as Lummis-Gillibrand, can be viewed in its entirety here.
According to the bill’s sponsors, the proposal represents the “most substantial and comprehensive bipartisan effort to provide certainty and clarity to the growing digital asset and blockchain industries.”
“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,” said Lummis. “As this industry continues to grow, it is critical that Congress carefully crafts legislation that promotes innovation while protecting the consumer against bad actors.”
Lummis said the aim of the legislation is to bring clarity to the myriad agencies overlooking the digital assets space, develop a tailored framework for stablecoins and smoothly integrate the nascent technologies into existing banking and tax law.
“'It’s unclear, though, whether the bill proposed by Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., can clear Congress, especially at a time of heightened partisanship ahead of midterm elections.' https://apnews.com/article/cryptocurrency-technology- congress-government-and-politics-7d2e5c6ba2bfc66cc7b77954074d6c57… #cryptocurrency"
Gillibrand described the legislation as “landmark” and pointed to improved clarity surrounding jurisdictions, frameworks and standards as impetus for adoption. She also said she is hopeful the bill will allow for flexibility in a rapidly changing landscape and ultimately spur innovation in the digital asset industry.
“Digital assets, blockchain technology and cryptocurrencies have experienced tremendous growth in the past few years and offer substantial potential benefits if harnessed correctly. 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,” Gillibrand said.
The cryptocurrency industry has been tumultuous of late, with regulators at the federal level taking firmer stances on consumer protection in recent months. According to an article from CNBC, last month popular tokens Bitcoin and Ethereum dropped below $26,000 and to just over $1,704, respectively, for the first time in months. Those assets were trading at near $65,000 and $4,600 in November of 2021.
Among some of the proposals in the bill include:
- Creating delineation between digital asset commodities and securities
- Developing a regulatory sandbox to encourage federal and state collaboration
- Creating new disclosure requirements for asset service providers
- Requiring an energy consumption study
- Creating a “workable structure” regarding digital asset taxation
- Demanding protections for consumers and markets engaging with stablecoins
- Creating a committee to develop “guiding principles, empower regulatory agencies and advise lawmakers on fast-developing technology”
- Giving regulatory authority regarding “digital asset spot markets” to the CFTC
- Directing the SEC and CFTC to consult with the National Institute of Standards and Technology and Treasury to develop cybersecurity guidance