In an attempt to make consumers more comfortable with a growing industry that is still unfamiliar to many. Senator Cynthia Lummis (R-Wyo) and Kristen Gillibrand (D-N.Y.) initiated a “Responsible Financial Innovation Act” being introduced on Tuesday to establish a clear federal regulatory structure for digital assets.

The bill is meant to liberate small-scale purchases of goods and services by making transactions of less than $200 tax-free – potentially clearing a part for cryptocurrency that acts more like a currency.

The legislation will set new federal laws for stable coins, taxes on small scale payments, and the jurisdictions of regulators – answering the uncertainties fledgling the financial sector from maturing.

The effort of Lummis and Gilibrand is seen in Washington as a starting point for a dialogue that would result in nothing till next year. The bill will most likely split into several pieces in 2023. The law makes are well placed to help shepherd key portions of the legislation with Lummis on the senate banking committee that oversees the securities and the exchange commission and Gilbrand holding a spot on the Agriculture Committee that oversees commodities and the CFTC (Commodity Futures Trading Commission).

Senator Cynthia Lummis says and I quote “The Responsible Financial Innovation Act creates regulatory clarity for agencies charged with supervising digital asset markets, providing a strong regulatory tailored framework for stable coins and integrates digital assets into our existing tax and banking laws”

Senator Kristen Gilibrand added that “The landmark bill will provide clarity to both industry and regulators while maintaining the flexibility to account for the ongoing evolution of the digital asset market.

Here are some of the key points from the proposed bill;

1. It would define the Terrain between crypto securities and commodities, allowing token issuers to know beforehand what they are launching based on the purpose of the asset and the rights or powers it conveys to the market”.
2. The market envisioned in the bill is dominated by commodities including Bitcoin, Ethereum, and others with significant market share.
3. It sought to clarify the meaning of Crypto Broker, especially hoping to protect wallet providers, software developers, and others from being snagged by certain tax reporting requirements.
4. The bill requires certain disclosures to the SEC from companies that raise funds through digital asset sales. This approach would ensure that there are accurate disclosures about digital assets widely traded but in a manner that ensures innovation – Lewis Cohen (Co-Founder of DLx Law, a crypto lobbying firm)
5. There would be a new framework for banks and credit unions to issue stable coins but issuers wouldn’t have to become depository institutions. The lawmakers insist that existing stable coin issuers and new entrants into the market have an adequate opportunity to compete with existing banks and credit unions.
6. The senators also suggest an industry “Sandbox” in which regulators let crypto firms test new products on a limited scale and duration.

The curtains of government regulation are drawing in fast on Cryptocurrencies. The fun days are slowly coming to an end. It would be interesting to see how things unfold from here.

Image Source; Investopedia