Politicians are quickly seizing on US government efforts to study and regulate crypto. Reuters reports Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) have introduced a bill, the Responsible Financial Innovation Act, that would forge a “complete regulatory framework” for cryptocurrency and other digital assets. The measure is meant to protect consumers and fold crypto into existing laws without restricting technical progress.
RIFA would set clearer definitions, such as establishing which assets are commodities or securities. It would also create requirements for stablecoins (cryptocurrencies pegged to another asset, such as conventional money) to minimize risks and enable speeder payments. The Commodity Futures Trading Commission (CFTC) would have the power to regulate digital spot markets, while providers would be subject to disclosure requirements. There would be a “workable” tax structure that would let you buy products with cryptocurrency without having to account for and report income.
The act would also prompt the government to further research digital assets. It would create a “sandbox” where federal and state regulators could work together on experimental launches of financial technology. The CFTC and Securities Exchange Commission would have to develop both security guidance and a self-regulatory organization. Other government agencies and offices would be tasked with studying energy consumption, the benefits (and dangers) of investing retirement savings in crypto and the security concerns around China’s official digital currency.
The bipartisan nature of the bill could increase its chances of surviving a Senate vote. Reuters also points out that the CFTC is considered friendlier to crypto assets than the SEC, That’s potentially useful for winning over regulation-averse politicians worried the SEC might limit crypto’s growth.
A House equivalent has yet to exist, and it’s unlikely that RIFA would reach President Biden’s desk before the current session of Congress ends. It’s likewise unclear just which digital assets are covered, and whether or not NFTs might be affected. We’ve asked for more details. The bill nonetheless represents the strongest effort yet to regulate crypto, and might just serve as a blueprint for future efforts to control and legitimize the blockchain in the US.