U.S. Sens. Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) introduced legislation that would create a regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency, and robust consumer protections.
The Responsible Financial Innovation Act, also known as Lummis-Gillibrand, is considered the most comprehensive bipartisan effort to date to regulate the digital asset and blockchain industries.
“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,” Gillibrand said. “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. Importantly, the Lummis-Gillibrand framework will provide clarity to both industry and regulators while also maintaining the flexibility to account for the ongoing evolution of the digital assets market.”
Among the provisions in the bill, it would create clear, common definitions for digital assets and establish standards for determining which digital assets are commodities and what types are securities.
“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… As this industry continues to grow, it is critical that Congress carefully crafts legislation that promotes innovation while protecting the consumer against bad actors,” 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.”
Also, the bill assigns regulatory authority over digital asset spot markets to the Commodity Futures Trading Commission (CFTC); sets requirements for stablecoins that will protect consumers and markets and promote faster payments; and creates an advisory committee to develop guiding principles, empower regulatory agencies and advise lawmakers on fast-developing technology.
In addition, it would impose disclosure requirements on digital asset service providers to ensure that consumers understand the product and can make informed decisions; requires a study on digital asset energy consumption by the Federal Energy Regulatory Commission (FERC); and directs the CFTC and the Securities and Exchange Commission (SEC) to develop a self-regulatory organization (SRO). Further, it directs the CFTC and SEC to consult with the Treasury and the National Institute of Standards and Technology to develop guidance relating to cybersecurity for digital asset intermediaries.
The bill also establishes a workable structure for the taxation of digital assets, among other provisions.