The bipartisan bill, titled the Responsible Financial Innovation Act, was announced Tuesday by Sens. Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY). If passed, the legislation would give the Commodity Futures Trading Commission much of the control over the regulation of digital assets, most of which would be categorized as commodities such as gold and wheat.
Lummis said the legislation “creates regulatory clarity for agencies charged with supervising digital asset markets, provides a strong, tailored regulatory framework for stablecoins, and integrates digital assets into our existing tax and banking laws.”
The bill came after months of discussion among leaders in both parties, including Senate Minority Leader Mitch McConnell (R-KY) and Finance Committee Chairman Ron Wyden (D-OR).
Most of the major cryptocurrencies, such as Bitcoin and Ethereum, would be defined as “ancillary assets” as part of the legislation and would be overseen by the CFTC. While the CFTC already oversees futures contracts for those two coins, the bill would give the CFTC oversight over the spot market.
The bill also envisions cryptocurrency trading platforms registering with the CFTC.
“The United States is the global financial leader, and to ensure the next generation of Americans enjoys greater opportunity, it is critical to integrate digital assets into existing law and to harness the efficiency and transparency of this asset class while addressing risk,” Lummis said in a statement.
While many in the cryptocurrency industry are pleased with the legislation and that it sidesteps the SEC, those who want to see digital assets more stringently regulated have been left disappointed by the proposal.
“The status quo would be better than this bill,” Todd Phillips, the director of financial regulation and corporate governance at the liberal think tank Center for American Progress, told the Washington Post.
“So many of these tokens are securities and need to comply with the regular, usual securities laws, and this bill tries to create a special crypto-specific disclosure regime that I don’t think discloses all the information investors need to fully evaluate whether to purchase a security,” he added.
SEC Chairman Gary Gensler has been pushing for stricter regulation of the cryptocurrency sphere.
During an appearance at the Aspen Security Forum last year, Gensler implored Congress to help rein in the “Wild West” of cryptocurrencies.
Gensler said that while his agency has taken and will continue to take its regulatory authorities over digital assets “as far as they go,” regulatory gaps remain.
Bitcoin and other cryptocurrencies have had a tough year. Bitcoin has struggled to remain above $30,000 in recent weeks as the Federal Reserve raises interest rates and fears of a recession continue. It was trading at about $69,000 just last November, representing a significant decline this year.