More bipartisan legislation seeks to regulate digital assets in the U.S. and offers a widely-encompassing framework for buying and selling cryptocurrency.
The federal initiative to regulate digital assets like cryptocurrencies continues, as lawmakers introduce new financial legislation to wrangle the volatile asset class.
Sens. Kirsten Gillibrand, D-NY; and Cynthia Lummis, R-Wyo., introduced the Responsible Financial Innovation Act on Tuesday. The bill focuses on creating a regulatory framework for digital asset sales and acquisitions.
“Digital assets, blockchain technology and cryptocurrencies have experienced tremendous growth in the past few years and offer substantial potential benefits if harnessed correctly. It is critical that the United States play a leading role in developing policy to regulate new financial products, while also encouraging innovation and protecting consumers,” said Gillibrand. “The bipartisan Responsible Financial Innovation Act is a landmark bill that will establish a regulatory framework that spurs innovation, develops clear standards, defines appropriate jurisdictional boundaries and protects consumers.”
Some of the bill’s tenets include requiring Decentralized Autonomous Organizations, or DAOs, to formally register as a business or other legal entity, requiring the IRS to issue new legal guidance governing digital assets and their mining, and distinguishing digital assets that function as a commodity or security to better fit into existing financial regulations.
The pending legislation also adds more requirements to what digital currencies can be functional stablecoins and how they will interact with depository institutions––a topic the Federal Reserve has been exploring.
“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,” said Lummis. “The Responsible Financial Innovation Act, a bipartisan framework that I crafted in conjunction with Senator Kirsten Gillibrand, 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.”
Multiple agencies, including the Treasury Department, IRS, and SEC would be required to coordinate a unified federal response to cryptocurrency economic activity in the U.S.
Managing cryptocurrencies and digital assets has been a popular topic within the Biden administration’s emerging technology policies. Earlier this year, President Biden signed a historic executive order to establish more federal intel and governance over cryptocurrencies.
Other lawmakers in the U.S. House of Representatives have also crafted legislation to exercise some control over digital assets with general bipartisan support.