A nonprofit crypto advocacy group says that a stablecoin bill proposed earlier this week by two US senators would violate free speech rights. In a new article, Coin Center says that the bipartisan stablecoin bill – proposed by Republican Senator Cynthia Lummis of Wyoming and Democrat Senator Kirsten Gillibrand of New York – is unconstitutional […]
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Two US lawmakers unveiled on Wednesday a proposed legislation that will create a regulatory framework for payment stablecoins. In a statement, senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) say the bipartisan Lummis-Gillibrand Payment Stablecoin Act will protect consumers, enable innovation and promote the dominance of the U.S. dollar while preserving the dual banking system. […]
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Two US Senators are reportedly looking to introduce new stablecoin regulations sometime this week or next. According to a new report by Forbes, Senators Kirsten Gillibrand, a Democrat from New York, and Cynthia Lummis, a pro-crypto Republican from Wyoming, announced earlier this week that they together will be introducing new stablecoin regulations. As stated by […]
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Patrick McHenry suggested that the hearings will look to add to the regulatory efforts being done on the bipartisan bill led by Senator Cynthia Lummis and Senator Kirsten Gillibrand.
Patrick McHenry, the Chairman of the House Financial Services Committee, has announced a series of joint hearings in May that will focus on addressing the market structure around digital assets in the U.S.
The move was revealed via a joint announcement on April 27 from Congressman McHenry, Glenn Thompson, Chairman of the House Agriculture Committee, French Hill, Chairman of the Digital Assets, Financial Technology and Inclusion Subcommittee, and the Chairman of the Commodity Markets, Digital Assets, and Rural Development Subcommittee, Dusty Johnson.
“Our Committees are embarking on an unprecedented joint effort to pass and sign into law clear rules of the road for the digital asset ecosystem. We must strike the appropriate balance to protect consumers without stifling responsible innovation,” the joint statement reads.
Speaking as part of a panel alongside crypto-friendly Senator Cynthia Lummis during the 2023 Consensus event on April 28, McHenry added more context to the upcoming hearings:
“We’re going to hold joint hearings when we return in May. This is going to be the first time we have had a holistic view for a house committee hearing around the regulation, our market structure around digital assets, and a holistic view of it.”
“What we plan to do over the next two months is report a bill out that deals with the capital raising piece for digital assets, all the way through to how a product can go from a securities regime to commodities regime and also at the same time, preserve our rights around products that are neither neatly [put] into a securities regime or commodities regime,” he added.
McHenry also stressed that the aim of the hearings is to establish a bill providing regulatory clarity to the crypto sector, which adds to the work being done on the bipartisan bill led by Lummis and Senator Kirsten Gillibrand.
@PatrickMcHenry said U.S. House Will Have Crypto Bill in 2 Months. pic.twitter.com/e06Sx9ec2H
— John Montague ("The ETH Lawyer") (@0xethlaw) April 28, 2023
The Responsible Financial Innovation Act, also known as the Lummis-Gillibrand bill, was initially introduced in the U.S. Senate in June 2022 and addresses Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) jurisdiction, stablecoin regulation and crypto taxation, among other things.
The wide-sweeping bill has faced delays, likely due to its complexity for non-crypto-versed Senators. Lummis and Gillibrand have since revised the bill and are expected to release the next draft soon.
“This is the work that Senator Lumms and Senator Gillibrand put in on the Senate side, but this is going to be our attempt in the House [of Congress],” he said.
Related: Elizabeth Warren wants the police at your door in 2024
Commenting on the revised bill, Lummis suggested that this iteration will likely have an additional focus on “national security interests” such as cyber security.
“Some of the people that I speak to that remain very skeptical about digital assets are concerned that cybercrime is not adequately addressed in our bill. So I think you’ll see a stronger cybercrime aspect to our bill. I think you’ll see some provisions that require certain registration [...] so that companies are properly regulated and vetted,” she said.
In my estimation, the reason so many young Americans are into #Bitcoin is because it is #soundmoney. The federal govt’s blank check spending habit, coupled with the complete erosion of the gold standard and the development of the internet, led us here. Inevitable.
— Cynthia Lummis (@CynthiaMLummis) April 25, 2023
Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?
Congress is set to take up a slew of legislative proposals in 2023 that will determine which regulators have chief domain over cryptocurrency.
It would be ideal for the industry for Congress to weigh in on its fate rather than leaving it to unelected regulators at the Securities and Exchange Commission (SEC). To that end, representatives from both sides of the aisle have introduced bills designed to offer “regulatory clarity.” The moderate position seems to favor placing crypto mostly under the jurisdiction of the Commodity Futures Trading Commission (CFTC).
To be sure, there are two Senate bills in particular that are not ideal.
Democratic Senate Agriculture Committee Chairwoman Debbie Stabenow has coauthored one proposal with Republican Sen. John Boozman. With an increasing number of eyes on the bill in the wake of FTX’s collapse, Stabenow says it is “definitely a priority” that the committee will take action on next year.
The Stabenow-Boozman bill, which has broad bipartisan support, would give the CFTC jurisdiction over cryptocurrencies. Democratic Senator Cory Booker and Republican Senator John Thune have also signed on to the bill. If it passes, all crypto trading platforms (brokers, dealers and custodians) would be required to register with the CFTC. Exchanges would report to the CFTC, and bankruptcy protections, as well as minimum capital requirements, would be implemented.
Related: Disaster looms for Digital Currency Group thanks to regulators and whales
Cryptocurrency insiders voice one particular recurring critique: The bill needs to lay out a clearer definition of securities and commodities. Will digital securities be evaluated by the Howey test or some other way? The bill doesn’t clarify. The bill also risks being interpreted as a de facto ban on decentralized finance (DeFi).
It is not a good approach to leave non-elected bureaucrats and courts to determine case-by-case whether or not digital assets are a security. The United States should avoid rulemaking by enforcement, allowing Congress to determine the difference between a digital security and a commodity.
Despite failing to define which cryptocurrencies constitute a security, the bill does change the definition of a commodity to include “digital commodity.”
The Stabenow-Boozman bill is not the only Senate proposal sitting on the docket for next year. Republican Senator Cynthia Lummis and Democratic Senator Kirsten Gillibrand have also drafted a comprehensive bill that would set standards for consumer protection, investor protection, and advertising.
Related: Sen. Lummis: My proposal with Sen. Gillibrand empowers the SEC to protect consumers
Lummis had gained a “pro-crypto” reputation before putting her name on the Responsible Financial Innovation Act (RFIA) alongside New York Senator Kirsten Gillibrand. The bill introduces a new term, ancillary asset, which seems similar to a utility token. To be designated an ancillary asset, the token must be fungible. People generally seem to view the bill as good for crypto.
The cryptocurrency industry is roughly 10 years old, and yet there are still clamors for “regulatory clarity.” If the SEC knew which ones were securities, however, wouldn’t they have informed the industry? Maybe not even the SEC knows where to draw the line. If you took a list of the top 20 cryptocurrencies to five different major law firms with experience in crypto, they would all likely offer different opinions about which would be deemed securities.
Related: Biden‘s anemic crypto framework offered nothing new
While there’s a lot of focus on the SEC, there are many organizations undermining the true ethos of crypto. Those include the Office of Foreign Assets Control (OFAC), the Financial Crimes Enforcement Network (FinCen), the Department of the Treasury, and more. Even figures from our own industry undermine crypto. Sam Bankman-Fried, who was arrested in the Bahamas and is set to be extradited to the United States, argued that interfaces to protocols should be gated by licenses and know your customer laws.
That eliminates everyone from partaking in the industry who can’t come up with the $100,000 to get a preliminary legal review, stifling innovation and entrepreneurial spirit. Only large companies would be able to offer financial services. The industry must push back against any legislation that infringes on the openness of crypto.
The United States House of Representatives will consider multiple crypto-related bills in 2023 in what could be a fateful year for crypto. The industry must become diligent now in ensuring events deep into this past crypto winter don’t give way to draconian regulations.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
The creator of Ethereum (ETH) challenger Cardano (ADA) says that he’s identified the catalyst that would end the crypto winter and spark a massive industry-wide rally. In a new interview with Cheeky Crypto, Charles Hoskinson, creator of the smart contract platform, says that if the US government were to pass the Financial Innovation Act, the […]
The post Cardano Creator Charles Hoskinson Names Catalyst That He Believes Could End Crypto Downturn and Trigger ‘Mega Bull Market’ appeared first on The Daily Hodl.
The push to regulate cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) forges ahead as a bipartisan bill has been submitted to the United States Senate. According to a new Wall Street Journal report, Michigan Democrat Debbie Stabenow who chairs the Senate Agriculture Committee is joining with Arkansas Republican John Boozman to empower the Commodity […]
The post Bitcoin (BTC) and Ethereum (ETH) To Be Policed by CFTC Under New US Senate Proposal: Report appeared first on The Daily Hodl.
Senator Cynthia Lummis said that non-crypto-versed Senators will need some time to understand and digest the proposals.
The major bipartisan crypto bill led by U.S. Senators Cynthia Lummis (Republican) and Kirsten Gillibrand (Democrat) will most likely be deferred to next year according to the duo.
Speaking during Bloomberg’s Crypto Summit on July 19, the Senators stated that there is a slim chance that the comprehensive bill would be pushed through the Senate this year, with Lummis noting that:
“I think both Kirsten and I believe that the bill, in one piece, as a total bill is more likely to be deferred until next year. It's a big topic, it's comprehensive, and it's still new to many U.S. Senators and so it's a lot for them to digest in the few remaining weeks we have in this calendar year.”
The Responsible Financial Innovation Act was introduced in the U.S. Senate on June 6 and aims to address the role of the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) when it comes to crypto regulation, along with stablecoin regulation, banking, tax treatment of digital assets and interagency coordination.
The pair however noted that there may be specific areas of their bill that could make it through this year via other legislation, with Gillibrand highlighting that fellow Democrat Senator Debbie Stabenow and Republican ranking member John Boozman are working on a bill proposing the CFTC as the key regulator for crypto.
The bill rolls in certain parts from the Lummis/Gillibrand legislation in relation to most digital assets being classified as commodities, and therefore falling under CFTC jurisdiction.
Lummis also noted that the part of their bill focused on the regulation of stablecoins issued by financial institutions could also be rolled into another bill from the banking committee and voted on this year.
The senators noted that they have seen a relatively positive response to the bill from both sides of the political spectrum.
“There seems to be some serious common ground forming, and just as Senator Lummis said, the two committees that have the most focused Senators on this topic are banking and agg [agriculture],” Gillibrand said, adding that there’s also been some focus from the finance committee as “Senator Wyden and his committee wrote a good part of the tax provisions in our bill.”
Related: CFTC labels 34 crypto and forex firms as unregistered foreign entities
While the duo accept that their comprehensive crypto bill will take time to get the proper attention before it gets voted on next year, Gillibrand emphasized that fellow Senators, regulators and lawmakers are beginning to realize the urgent need to at least get consumer protections in place:
“There’s additional interest now, because they’ve seen that this is something important to do, that consumers are not being protected today, there’s no oversight or accountability, and there’s no rules of the road.”
“So there’s more urgency now, and also more of a sense that this is something we need to do,” she added.
The comments were made in reference to the recent bankruptcy proceedings from crypto lending firms such as Celsius and Voyager in which users have been put at severe risk of losing their deposited assets on those platforms.
Lummis also pointed to the $40 billion Terra ecosystem collapse in May, and the risky nature of algorithmic stablecoins which require further oversight.
“Most cryptocurrencies go to the SEC [...] Bitcoin and Ether would be certainly commodities, and that's agreed upon,” said the U.S. Senator from New York Kirsten Gillibrand.
Senators Kirsten Gillibrand and Cyntia Lummis believe that most altcoins would likely be considered securities under their proposed new legislation — but confirmed that Bitcoin (BTC) and Ether (ETH) will be classified as commodities.
Lummis and Gillibrand both agreed with Securities and Exchange Commision Chair Gary Gensler’s assessment that most cryptocurrencies are securities under the Howey test with Gillibrand stating:
“Most cryptocurrencies go to the SEC [...] Bitcoin and Ether would be certainly commodities, and that's agreed upon. That's agreed with Chairman Gensler as well as the chairman of the CFTC.”
Gillibrand pushed back on reports characterizing the legislation as making the CFTC the primary regulator. “I don't think CFTC is the primary regulator," she said. "They just have the obligation to regulate Bitcoin and Ether, the majority of cryptocurrencies today.”
The pair made the comments during a Washington Post event on June 8, a day after releasing the details of the Responsible Financial Innovation Act.
.@SenLummis tells @ToryNewmyer, “The CFTC, although it will have the lion share by market cap, the majority of the digital assets...have characteristics of securities that will require the SEC's disclosure capabilities....The SEC's role in this is absolutely critical." pic.twitter.com/1B0wnQQ62p
— Washington Post Live (@PostLive) June 8, 2022
Rostin Behnam, chair of the Commodity Futures Trading Commission (CTFC), was also at the event and took a slightly different view on the proportion of altcoins that are securities. He said that while there are “probably hundreds” of coins that replicate security coins, there are also many commodity coins, such as Bitcoin (BTC) and Ether that should be regulated by the CFTC.
“It’s pretty clear that many of the digital assets themselves replicate or look like commodities. They're more like stores of value than they are securities.”
Tony Tuths, head of the digital assets team at KPMG Tax, told Cointelegraph that the legislation, under its current form is unlikely to “move forward” in the foreseeable future, adding it was unclear which coins will ultimately fall within the purview of the SEC versus the CTFC.
“On the regulatory side the legislation calls for the CFTC to be the primary regulator but then carves out a wide swath of tokens that have attributes similar to securities for regulation by the SEC. It will be a struggle to decipher what exactly is in the SEC bucket but it could be the exception that swallows the rule. “
Related: Class action suit against Coinbase alleges unregulated securities sales
The new bipartisan bill is expected to lean heavily on the Howey Test to determine whether a particular coin is classed as a security or a commodity.
“We’re trying to just fit the digital asset world into our current regulatory framework. […] We spent a lot of time on the definition of the modern Howey test,” said Senator Lummis during a CNBC interview on June 7.
The Howey Test is a framework set by the U.S. Supreme Court to determine whether a transaction qualifies as an investment contract, and thus considered security.
The Howey Test has become a focal point in the SEC’s case against Ripple which began in December 2020, alleging that the company used its digital token XRP to raise funds in 2013, and was an unregistered security token at the time.
A new bipartisan bill is proposing crypto regulations fall under the purview of the Commodity Futures Trading Commission (CFTC) instead of the U.S. Securities and Exchange Commission (SEC). The Lummis Bill, sponsored by US Senators Cynthia M. Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.), aims to be the first serious attempt at bringing regulatory clarity to the […]
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