Around around the world, regulators are trying to tackle the trillion dollar elephant in the room: the digital asset market. Because cryptocurrency is a nascent industry that currently exists largely outside regulatory frameworks, it is still in murky waters and those in – and outside the industry – seem to want to have clear and unambiguous instructions to move forward.
A proposed cryptocurrency bill, sponsored by by US Senator Cynthia Lummis, Republican of Wyoming, and Kirsten Gillibrand, Democrat of New York, aim to install guide bars around the digital asset space. The 69 pages, bipartisan bill is comprehensive and addresses many corners of the cryptocurrency market.
Some of the most notable aspects of the proposal include:
“This bill tries to do everything, that’s possibly its biggest stumbling block.” Christopher LaVigne, co-chair of crypto practice, Withers
- Make tax-free crypto transactions of $200 or less.
- Define guidelines to distinguish cryptocurrencies as commodities or securities (most would fall under the commodity category, according to the bill).
- Backup stablecoins with 1:1 currency, aiming for “100% reserve, asset class and detailed disclosure requirements for all paying stablecoin issuers”.
- Grants the United States Commodity Futures Trading Commission exclusive spot market jurisdiction over cryptocurrencies defined as commodities.
- Marks the US Securities and Exchange Commission and the CFTC as the main watchdogs for the digital asset industry.
“The bill is important because it is a step in the right direction for the legislation and definition of ‘cryptocurrency’, what ‘crypto assets’ are and what regulation should be like,” Nick DonarskiFounder and CTO of ORE . systemtold TechCrunch.
“But at the same time, the bill, like other bills related to cryptocurrencies, will be more likely to split to attract enough support to pass.”
Empowering CFTC
“There’s a lot of color here and it’s quite fun,” Ken Goodwindirector of legal and institutional affairs at Blockchain Intelligence Team, told TechCrunch. He said: “By granting CFTC custody to most digital assets, it is setting a precedent and making the agency more authentic.
Goodwin has 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 position on the proposed bill.
“I will never doubt [CFTC] really at the forefront of this; I would have thought the SEC would be the regulator of this,” said Goodwin. “Even if this bill doesn’t pass, people will look to the CFTC for guidance.”
