In an effort to establish a comprehensive regulatory framework for digital assets, United States Senators Cynthia Lummis and Kirsten Gillibrand are reintroducing the Responsible Financial Innovation Act. The bipartisan legislation aims to clarify the roles of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) in regulating digital assets while providing consumer protection measures.
Originally introduced in June 2022 during the crypto market crash and subsequent bankruptcies, the updated bill includes provisions to update the U.S. tax code, allowing the industry to self-fund its oversight. Moreover, the legislation aims to prevent events like the collapse of the FTX crypto exchange by implementing guardrails.
The bill was drafted following the depegging incident of Terraform Labs, which required payment stablecoins to be issued exclusively by depository institutions. It addresses the need for clarity in U.S. regulations to prevent firms from operating without the risk of enforcement actions or other crackdowns.
The Lummis-Gillibrand bill has garnered praise from industry leaders for taking a bipartisan approach at a time when aspects of the crypto space have been politicized. Some lawmakers have highlighted illicit uses of digital assets, while others have proposed bans on central bank digital currencies. The reintroduction of this bill provides a balanced approach to address these concerns.
Although the Responsible Financial Innovation Act is one option, members of the House of Representatives have also proposed alternative legislation to regulate cryptocurrencies. One draft limits the authority of the SEC over crypto firms, while another suggests that the Federal Reserve should become the primary regulator for stablecoins.
By reintroducing this bill, Senators Lummis and Gillibrand aim to prevent future market disruptions, protect consumers, and foster the growth of the crypto asset industry in the United States. The legislative proposal serves as an important step towards establishing regulatory clarity and ensuring a safe and prosperous environment for businesses and investors in the digital asset space.