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Amid Crypto Turmoil, Senators Propose Sweeping Oversight

WASHINGTON– Wide-ranging bipartisan legislation unveiled on Tuesday would regulate cryptocurrencies and other digital assets following a string of high-profile bankruptcies and failures.

It is unclear, however, whether the bill proposed by Sens. Kirsten Gillibrand, DN.Y., and Cynthia Lummis, R-Wyo., Can clear Congress, especially in a time of heightened partisanship ahead of the midterm elections. The bill also comes as cryptocurrency advocates have become bigger — and bigger spenders — players in Washington.

The bill, called the Responsible Financial Innovation Act, proposes legal definitions of digital assets and virtual currencies; require the IRS to adopt guidelines on merchant acceptance of digital assets and charitable contributions; and would distinguish between digital assets that are commodities or securities, which has not been done.

The bill “creates regulatory clarity for agencies tasked with overseeing digital asset markets, provides a robust and tailored regulatory framework for stablecoins, and integrates digital assets into our existing tax and banking laws,” Lummis said in a statement. a press release sent by e-mail. Stablecoins are a type of cryptocurrency tied to a specific value, usually the US dollar, another currency, or gold.

Lummis has been a strong advocate for cryptocurrency development and has invested between $150,002 and $350,000 in bitcoin, according to his financial disclosure.

The legislation imposes disclosure requirements on digital asset companies to ensure consumers can make informed decisions, delineates the agency’s responsibilities over various digital assets – such as the Commodity Futures Trading Commission’s jurisdiction over bitcoin – and requires a study on the energy consumption of digital assets, among many other proposals. .

The bill comes at a tumultuous time for cryptocurrencies, including the May collapse of stablecoin terraUSD and luna, the coin for buying and selling assets, which was trading at less than one ten thousandth. of 1 cent.

Gillibrand said the bill establishes “a regulatory framework that drives innovation, develops clear standards, sets appropriate jurisdictional boundaries and protects consumers.”

These developments have prompted lawmakers on both sides of the aisle to support legislation that takes a closer look at digital assets.

And crypto lobbying followed suit. This year, for the first time, industry executives flooded cash in congressional races, spending $20 million, records and interviews show.

Cryptocurrencies have their supporters in Congress. Sen. Cory Booker, DN.J., said at the DC Blockchain Summit in Washington last month that he was drawn to “the exciting potential democratizing effect that can come from creating broader pathways of opportunity for marginalized communities”.

Despite the risks, about 16% of American adults, or 40 million people, have invested in cryptocurrencies, according to a September 2021 Pew Research Center survey. money in cryptocurrency.

African Americans are also more likely to invest in cryptocurrencies than white consumers.

President Joe Biden signed an executive order in March urging the Federal Reserve to consider whether the central bank should create its own digital currency and ordered federal agencies, including the Treasury Department, to study the impact of the cryptocurrency on financial stability and national security.

Treasury Secretary Janet Yellen said in an April speech at American University that more government regulation was needed to control the proliferation of cryptocurrency and prevent fraudulent or illicit transactions.

“We have a vested interest in ensuring that innovation does not lead to fragmentation of international payment architectures,” she said, adding that the Treasury Department will work with the White House and other agencies to develop reports and recommendations on digital currencies.


Associated Press writer Ken Sweet in New York contributed to this report.

ABC News

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