United States Senators Cynthia Lummis and Kirsten Gillibrand will reintroduce legislation aimed at establishing a comprehensive regulatory framework for digital assets.
The U.S. lawmakers said they would reintroduce the Responsible Financial Innovation Act to the Senate on July 12 after roughly a year of being tabled in the previous session of Congress. The bipartisan piece of legislation — Lummis is a member of the Republican Party, and Gillibrand a Democrat — was aimed at clarifying the roles of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) in regulating digital assets as well as providing consumer protection.
The crypto asset industry is here to stay.
Today, @SenGillibrand and I are reintroducing landmark legislation to create a federal regulatory framework that allows crypto businesses and investors to prosper here in America while protecting consumers from bad actors. pic.twitter.com/z2pr0evWt2
— Senator Cynthia Lummis (@SenLummis) July 12, 2023The Lummis-Gillibrand bill was first introduced in June 2022 amid the crypto market crash that resulted in the bankruptcies of several high-profile firms and the price of many tokens plummeting. According to the fact sheet provided by Senator Lummis, the updated legislation will include updates to the U.S. tax code allowing the industry “to fund its own oversight” as well as guardrails "to prevent another FTX-style event from occurring" — the crypto exchange collapsed in November 2022 after the bill was introduced.
Lummis’ and Gillibrand’s bill was drafted after the collapse of Terraform Labs, the South Korea-based firm which saw its algorithmic stablecoin depeg from the U.S. dollar. As a result, the legislation will also require payment stablecoins to be issued only by depository institutions.
Related: US senator revamps efforts for crypto regulations amid SEC lawsuits
Some lawmakers and industry leaders have criticized U.S. regulators for a lack of clarity which would allow firms to operate without risk of enforcement action or other crackdown. Many in the space have praised the Lummis-Gillibrand bill for taking bipartisan action at a time when some lawmakers have politicized aspects of the crypto space — from Senator Elizabeth Warren highlighting illicit uses of digital assets to Florida governor and 2024 presidential candidate Ron DeSantis calling for a ban on central bank digital currencies.
While the Responsible Financial Innovation Act is one option, members of the House of Representatives have proposed other legislation aimed at addressing a framework for cryptocurrencies. A discussion draft released in June in the House would largely limit the SEC’s authority over crypto firms, while the House Financial Services Committee has also drafted legislation proposing the Federal Reserve become the main regulator behind establishing requirements for stablecoins.
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