The crypto market has been in a downtrend since the beginning of the year, with the price of bitcoin, ethereum, BNB, solana, cardano, and XRP losing more than 50% of their value from their all-time highs. However, there is a major development on Capitol Hill that could turn cryptocurrency prices around.
On Tuesday, two U.S. senators unveiled a bill that would provide a clear regulatory framework for crypto assets in the country. The bill, called the Digital Asset Market Structure and Investor Protection Act, was introduced by Republican Senator Cynthia Lummis and Democratic Senator Kirsten Gillibrand.
The bill aims to address some of the key challenges and risks facing the crypto industry, such as market manipulation, fraud, hacking, tax evasion, and money laundering. It also seeks to promote innovation and competition in the crypto space by creating a legal definition for digital assets and clarifying the roles and responsibilities of different regulators.
According to the bill’s summary, some of the main provisions include:
Creating a statutory definition for digital assets and digital asset securities and providing the Securities and Exchange Commission (SEC) with authority over digital asset securities and the Commodity Futures Trading Commission (CFTC) with authority over digital assets.
Establishing a de minimis exemption for digital asset transactions for personal use.
Providing legal certainty for custodial services of digital assets by requiring registration with federal regulators.
Requiring digital asset transactions that are not recorded on a public distributed ledger to be reported to a registered digital asset trade repository within 24 hours to minimize the potential for fraud and promote transparency.
Directing the Federal Reserve to issue a report on the feasibility of creating a U.S. central bank digital currency (CBDC).
Directing the Financial Crimes Enforcement Network (FinCEN) to update its guidance on digital assets and establish reporting requirements for taxpayers who hold digital assets in offshore accounts.
Directing the SEC and CFTC to issue joint rules on market manipulation prevention and investor protection for digital asset markets.
The bill’s sponsors said that their goal is to create a safe and efficient environment for crypto investors and innovators in the U.S. “Digital assets have enormous potential to transform our economy,” Gillibrand said in a press release. “But right now, our outdated laws are holding back innovation and growth. Our legislation would provide much-needed clarity for consumers, investors, and businesses within this space.”
Lummis echoed Gillibrand’s sentiment and added that the bill would also protect national security interests. “Digital assets have quickly grown to become a $2 trillion market that touches every corner of our economy,” Lummis said. “Rather than leave this market to those who would act nefariously, Congress must embrace it and ensure we have the tools needed to protect those who buy and sell digital assets.”
The bill has received positive feedback from some of the leading players in the crypto industry, such as Coinbase, Fidelity Digital Assets, Square, Blockchain Association, Chamber of Digital Commerce, Coin Center, Digital Chamber PAC, Grayscale Investments, Kraken, Paxos Trust Company LLC., Ripple Labs Inc., Stellar Development Foundation., Wyoming Blockchain Coalition., among others.
However, the bill still faces an uncertain future in Congress, as it would need to pass both chambers and be signed by President Joe Biden before becoming law. Moreover, some lawmakers may have different views on how to regulate crypto assets or may oppose any regulation at all.
The bill comes amid growing global scrutiny and regulation of crypto markets by various governments and agencies. For example, China has recently cracked down on crypto mining and trading activities; India has proposed banning private cryptocurrencies; Japan has tightened its oversight of crypto exchanges; and the U.K. has banned Binance from operating in the country.
The U.S. has also taken some steps to address crypto-related issues in recent months. For instance, the SEC has sued Ripple over its XRP token; FinCEN has proposed new rules for crypto transactions; the IRS has issued guidance on crypto taxation; and several states have enacted or proposed their own crypto laws.
However, many in the crypto community have argued that the U.S. lacks a comprehensive and coherent approach to regulating crypto assets and that this creates uncertainty and confusion for both investors and innovators. They have also warned that the U.S. risks falling behind other countries that are more supportive of crypto innovation.
The bill introduced by Lummis and Gillibrand could potentially change that and provide a clear and consistent framework for the crypto industry in the U.S. If passed, the bill could boost the confidence and adoption of crypto assets in the country and pave the way for more innovation and growth in the sector.