Two United States Senators have taken steps to address the rapidly growing cryptocurrency industry. Senator Cynthia Lummis (R-Wyoming) and Senator Kirsten Gillibrand (D-New York) have reintroduced the Lummis-Gillibrand Responsible Financial Innovation Act in order to create a comprehensive regulatory framework for the crypto asset industry. These landmark bipartisan efforts are aimed at strengthening the industry against fraud and other nefarious actors while continuing to promote innovation.
The Lummis-Gillibrand Act seeks to place crypto assets within the regulatory perimeter and requires all crypto asset exchanges to register for compliance. It also tackles the issue of decentralized finance through safeguards for consumers, as well as limits on crypto asset lending. Furthermore, the legislation seeks to close the wash sale loophole, codify the criteria to determine which crypto assets are securities or commodities, and impose new penalties for willfully violating money laundering laws.
Take, for example, stablecoins. Stablecoins are the most commonly used form of digital asset and one of the cornerstones of the crypto asset industry. Under the new bill, all payment stablecoins would only be issued by depository institutions. Algorithmic stablecoins would be regulated by the Commodity Futures Trading Commission. It also seeks to provide $1.4 billion in appropriations in order to finance the implementation of the policy.
The current effort to enact clearer regulation in the crypto industry is welcomed by members on both sides of the aisle. Representative French Hill (R-Arkansas) commented that, “I am glad to see Senators Lummis and Gillibrand reintroduce their bipartisan legislation to establish a regulatory framework for digital assets. Their work demonstrates that protecting consumers, providing legal clarity, and spurring innovation was never a partisan effort. I look forward to our continued work with our Senate colleagues on common sense legislation.”
Senator Lummis also believes these efforts are important and commented that, “Crypto assets are constantly evolving, and as the industry changed during the last year, Senator Gillibrand and I worked to improve our legislation to ensure it appropriately balances consumer protections while allowing innovation to continue.”
Senator Gillibrand’s sentiment mirrored Senator Lummis’, stating that “Over the past year, we worked together and with key stakeholders to improve our framework–we added strong new consumer protections and anti-money laundering provisions, delivered additional resources to regulatory agencies so they can enforce new regulations, and created clarity so that businesses can innovate responsibly.”
The Lummis-Gillibrand Responsible Financial Innovation Act is an example of the bipartisan efforts that are needed to ensure the proper stewardship of the crypto asset industry. As Senator Lummis pointed out on her Twitter, “The crypto asset industry is here to stay.” With the help of dedicated lawmakers such as Senator Lummis, Senator Gillibrand, and Representative French Hill, the crypto industry can be the great benefit to the world that its proponents imagine.