US Senators Have Reintroduced a Crypto Measure That Calls For Thorough Regulation
After the market crash and exchanges bankruptcy of 2022, the Responsible Financial Innovation Act will construct barriers to avoid another FTX-style event from occurring.
Senators Cynthia Lummis and Kirsten Gillibrand of the United States will present legislation that would provide a thorough regulation for digital assets. After being put on hold during the last Congress' session for over a year, the Responsible Financial Innovation Act will be reintroduced to the Senate on July 12. The goal of the bipartisan piece of legislation was to define the functions of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission in controlling digital assets and protecting consumers. Interesting enough, Lummis is a Republican and Gillibrand is a Democrat.
The Lummis-Gillibrand legislation was originally submitted in June 2022 during the crypto market meltdown that led to the failure of numerous well-known companies and a sharp decline in the value of several tokens. The updated legislation will contain safeguards to avoid another FTX-style occasion from occurring, based on the fact sheet provided by Lummis, as well as changes to the U.S. tax code enabling the industry to fund its own oversight. The crypto exchange broke down in November 2022 after the bill had been introduced. The measure by Lummis and Gillibrand was created in response to the failure of Terraform Labs, a South Korean company that had depegged its algorithmic stablecoin from the dollar. The legislation thus mandates that only depository institutions may issue payment stablecoins.
Amidst SEC Litigation, a US Lawmaker Updates Attempts to Regulate Cryptocurrency
U.S. authorities have come under fire from certain legislators and business executives for their lack of clarity, which would allow businesses to operate without fear of fines or other repercussions. The Lummis-Gillibrand bill has received praise from many in the industry for implementing bipartisan steps at a time when certain politicians have politicized elements of the crypto space, from Sen. Elizabeth Warren pointing out illicit utilization of digital currency to Florida Governor and 2024 presidential nominee Ron DeSantis asking for a prohibition on central bank digital currencies.
Members of the House of Representatives have suggested further legislation aimed at establishing a framework for cryptocurrencies, albeit the Responsible Financial Innovation Act is one alternative. The SEC's power over cryptocurrency enterprises would be substantially curtailed under a discussion draft presented in the House in June. The House Financial Services Committee has also proposed legislation in which the Federal Reserve would take the lead in regulating stablecoin standards.
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