Senators from the United States have introduced a crypto bill that lays out a broad plan for future regulations

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Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced a broad, bipartisan crypto bill on Tuesday, aiming to extend a complete set of laws across digital assets in the United States and giving business lobbyists something to fight.

Their initiative would exclude small-scale purchases of goods and services from taxation by making all transactions under $200 tax-free, perhaps paving the way for a cryptocurrency that functions more like a currency. The law would also give the Commodity Futures Trading Commission more authority and a dominating presence, as predicted.

The far-reaching law aims to address the most pressing issues around digital assets. It would establish new federal law for stablecoins, small-scale payment taxes, and regulatory authorities, removing the uncertainties that have prevented the embryonic financial industry from growing.

Lummis and Gillibrand's initiative, on the other hand, is considered in Washington as a beginning point for a conversation that won't result in anything meaningful until next year. It joins numerous earlier legislation that aimed to take off little portions of the cryptocurrency environment, such as Senator Pat Toomey's recent campaign for stablecoin laws (R-Pa.). Some of that work is even referenced.

Even so, when it works its way through congressional committees in the coming session, the initiative is expected to be broken into many components in 2023. The legislators are ideally positioned to assist shepherd important aspects of the measure, with Lummis on the Senate Banking Committee, which controls the Securities and Exchange Commission, and Gillibrand on the Senate Agriculture Committee, which regulates commodities and the CFTC.

According to Lummis, their "Responsible Financial Innovation Act" "creates regulatory clarity for authorities involved with overseeing digital asset markets, offers a solid, specialized regulatory framework for stablecoins, and integrates digital assets into our current tax and banking legislation."

These are some of the key components of what Gillibrand called a "landmark measure" that "would offer clarity to both business and regulators while also keeping flexibility to accommodate for the continued growth of the digital assets market":

- It would draw a line between cryptocurrency securities and commodities, allowing token issuers to know what they're getting into ahead of time based on the "purpose of the asset and the rights or powers it transmits to the customer." The bill's market is dominated by commodities, which includes most of the top names in crypto, including Bitcoin, Ethereum, and dozens of other tokens with considerable market share that would come within the CFTC's definition of "ancillary assets."

- As requested by agency chairman Rostin Behnam, the legislators would grant the Commodity Futures Trading Commission control over the spot markets in crypto commodities. This would give the government watchdog a significant new power over cash markets, which it currently lacks.

- It also provides "needed legal clarity" on how to handle customer holdings, following the recent uproar over customers' tokens being entwined with an exchange's assets in the event the company goes bankrupt – a concern that erupted after Coinbase (COIN) mentioned it in a recent Securities and Exchange Commission filing. Any crypto measures moving through Congress should have improved custody provisions, according to the Biden administration.

- The Lummis-Gillibrand measure also incorporates wording from a bill introduced last year by Rep. Patrick Henry and others to define the definition of a crypto broker, with the goal of protecting wallet providers, software developers, and others from getting caught up in tax reporting obligations.

- While the law does not create the self-regulatory organization (SRO) that many in the sector have campaigned for, it does require a review by the SEC and CFTC, as well as a recommendation for its creation.

- Crypto operations monitored by the CFTC would be required to begin paying fees to finance the agency under this proposal, similar to how the SEC is funded presently.

- The senators also propose an industry "sandbox," in which regulators would allow crypto companies to develop new goods on a restricted scale and for a limited period of time.

- In light of the recent, spectacular collapse of TerraUSD (UST), the bill's move toward "100% reserve, asset type, and thorough disclosure requirements for all payment stablecoin issuers" will be extensively scrutinized. Banks and credit unions would be permitted to produce stablecoins under a new structure, but they would not have to become depository institutions. "Current stablecoin issuers and future entrants into the market have an ample opportunity to compete with existing banks and credit unions," the legislators believe.

- The law also mandates that corporations collecting cash through digital asset sales make certain disclosures to the SEC. According to Lewis Cohen, co-founder of DLx Law, the strategy would ensure "that market participants and our securities regulatory community receive full and accurate disclosures about those digital assets that are extensively traded, but in a manner that stimulates innovation."

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