US Senators Propose Crypto Bill for Comprehensive Regulation over Digital Assets

Fazzaco learned that a crypto bill was proposed by U.S. Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.). The bill, cited as "Responsible Financial Innovation Act", is wide-reaching and covers a comprehensive set of regulations across digital assets in the U.S. Meanwhile, the legislation grants the Commodity Futures Trading Commission (CFTC) primary oversight authority over cryptocurrencies.

The senators stated that "the 'Responsible Financial Innovation Act' 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" ,and it "will provide clarity to both industry and regulators, while also maintaining the flexibility to account for the ongoing evolution of the digital assets market".

The bill stipulates that the CFTC would have authority over the spot markets in crypto commodities, which is a key new power for the federal watchdog that doesn't now have much reach into cash markets. This signals the regulator's primary role in regulating crypto products.

Even though the bill would likely not be passed as a law in the current session of Congress since the midterm elections is just months away, Jaret Seiberg, an analyst with Cowen Washington Research Group, considers it a starting point for the future debate about how crypto market should be regulated, "We expect this bill will be the starting point for debate next year regardless of which party controls the House or the Senate, what does matter is that there is a bipartisan effort to bring crypto into the existing regulatory regime even if the details are likely to change."

It should be noted that new rules for "stablecoins" have been established in the bill, which moves toward "100% reserve, asset type and detailed disclosure requirements for all payment stablecoin issuers", since we all know that terraUSD (UST) has suffered dramatic collapse recently.

Among other items, the bill also defines specific disclosure requirements for crypto companies to ensure that market participants and securities regulatory community receive detailed and accurate disclosures about those digital assets that are widely traded.