Revamp of Lummis-Gillibrand Bill Looks to Resurrect Crypto’s American Dream

crypto regulation

U.S. regulation of digital assets isn’t merely the elephant in crypto’s living room.

It’s the wildebeest trampling across the domestic crypto industry’s landscape.

The U.S. Securities and Exchange Commission’s (SEC) decisive enforcement actions against two of the world’s largest crypto exchanges, Binance and Coinbase, have sent a broad chill through the operating environment and dulled the hopes of some of even the sector’s most ardent supporters.

But it’s important to remember that the SEC doesn’t make the rules — it just enforces them, whatever they may be and however they are written.

As a federal agency, the regulator’s powers remain ultimately dependent on legislative decisions made by lawmakers.

This, as Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) on Wednesday (July 12) reintroduced a bipartisan bill meant to serve as a comprehensive legal framework for both policing and supporting the digital asset industry — The Responsible Financial Innovation Act.

“The crypto asset industry is here to stay,” Lummis tweeted.

“We need a regulatory framework that integrates crypto assets into our economy in a way that ensures consumer protection. This legislation is needed to protect consumers but also so there are rules for the road for companies … [it is a] framework that allows crypto businesses and investors to prosper here in America while protecting consumers from bad actors,” the Wyoming lawmaker added.

Read more: Are the SEC’s Actions an End or an Exorcism for Crypto in America?

From Goodbye Crypto to Bipartisan

Originally introduced over a year ago on June 7, 2022, The Responsible Financial Innovation Act is unique in the bipartisan approach it takes — as well as how comprehensive, and long-awaited, the piece of proposed legislation is.

Observers believe the senators’ bill is more ambitious than those currently under discussion within the House Financial Services Committee and the House Agriculture Committee because it tackles the majority of crucial issues under discussion as it relates to the digital asset sector’s viable go-forward future in America.

While House Financial Services Chairman Rep. Patrick McHenry has said he intends for his committee to “mark-up some form of this [crypto] legislation when we return from the July 4th recess,” no such updates have to-date been published despite six months of hearings, leaving the door open to the Lummis-Gillibrand bill.

As PYMNTS wrote earlier, there is a will in Congress to create rules for cryptocurrencies, even as the question of how to get there “remains up for debate.”

Importantly, the two senators’ digital asset bill inserts the Senate itself back into the legislative conversation around crypto, which has so far been dominated by Congress and demarcated by broader party lines this year.

See: An American Revolution — How US Crypto Policy Diverges From Rest of World

A Comprehensive Crypto Bill Comes Back to Life

The bill comes back to Washington as crypto companies are making a renewed push to lobby for legislation that they hope will be favorable to their own interests.

Per a Reuters report Monday (July 10), the cryptocurrency industry has spent around $6 million on federal lobbying in the first quarter of this year. Embattled firm Coinbase was the largest spender.

The 100-plus page act from Sens. Gillibrand and Lummis places cryptocurrencies within a regulatory perimeter that would see more oversight of the industry by the Commodity Futures Trading Commission (CFTC) as opposed to the SEC, as well as gives clear oversight for payment stablecoin issuers, which include state and federal banks as well as credit unions — while blocking Fed access.

As part of the bill, crypto exchanges will have to register with the CFTC — not the SEC.

The bill also calls for funding of the CFTC and other agencies in order to implement its policies.

To placate crypto critics, including those within Washington like Sen. Elizabeth Warren (D-Mass.), the refreshed legislation includes three provisions originally proposed by Warren and Sen. Roger Marshall (R-Kan.) in their anti-money laundering bill introduced last year.

In order to combat crypto’s use as a tool for criminals and bad actors, the legislation proposes the establishment of an interagency law enforcement working group tasked with policing crypto.

“Crypto assets will be a part of the future of finance, and America must continue to lead the global financial system,” the bill states.

The only thing missing is a clear path forward to the President’s desk.