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The focus of the latest U.S. cryptocurrency bill: classified regulation, encouraging bitcoin payments

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Take a look at the core points of the 69-page crypto regulation draft in one article

Original title: "SENATOR LUMMIS INTRODUCES LANDMARK BITCOIN BILL: HERE'S WHAT'S IN IT"

Original author: NAMCIOS, Bitcoin Magazine

Original compilation: czgsws, 0x9F, BlockBeats

Cynthia Lummis (R-WY) from the Senate Banking Committee and Kirsten Gillibrand from the Senate Agriculture Committee ( D-NY)’s bipartisan bitcoin legislation comes months after the bill was announced.

The Responsible Financial Innovation Act, also known as the Lummis-Gillibrand Act, seeks to < b>encourages “responsible innovation” by integrating digital assets into existing laws and provides a clearer framework for the largely unregulated crypto industry, which lacks common standards, the The Act contains a total of 69 pages of detailed definitions and regulations.

SEC and CFTC: Watchdog

The bill requires the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to do most of the regulatory work, and the two lawmakers put the crypto space under the umbrella of specific regulators once and for all.

The SEC will regulate digital assets classified as securities, while the CFTC will oversee digital assets recognized as commodities assets.

The textual description of the Act will serve as the basis for assessors to classify digital assets.

The Lummis-Gillibrand Act proposes a review of the rights or powers of holders of digital assets and the inherent purpose of that asset.

According to the Act,ancillary assets refer to the provision, sale or Intangible fungible assets provided by other means.

The legislation uses the Howey test to determine that ancillary assets offered to purchasers under investment contracts are not securities in nature.

Assets to be classified as securities must provide the holder with debt or equity in a business entity, liquidation rights, or An entity's right to interest or dividend payments, a share of profits or income in a business entity "derived entirely from the entrepreneurial or managerial efforts of another," or any other economic interest in the entity.

The digital assets that are not fully decentralized and benefit from the "entrepreneurship and management" of the project party, the work decisions of these project parties Assets that represent the value of the asset but are not debt or equity in themselves, or that do not generate profits or other financial interests in a business entity, will not be classified as securities as long as disclosures are filed twice a year with the SEC.

This presumption that ancillary assets are commodities may be appealed in court.

The legislation also grants the CFTC exclusive spot market jurisdiction over all fungible assets that are not securities, including ancillary assets. Trading platforms are required to register with the CFTC to conduct trading activities and are subject to rules regarding custody, client protection, protection from market manipulation and information sharing. The CFTC will be allowed to charge small fees to digital asset trading platforms to cover the agency's increased costs.

CFTC mandate to oversee spot markets could help pave way for US bitcoin spot ETF as SEC opposes its Much of the argument has to do with the lack of regulation in the spot market and trading platforms not cooperating with regulators.

The act also directs the SEC and CFTC to study and report on the creation of self-regulatory organizations (SROs) Complementary role in cooperation with market regulators.

Finally, the Responsible Financial Innovation Act also requires the two regulators, in consultation with Institutions develop a comprehensive set of guidelines for considering their cybersecurity, including topics such as secure operations, risk identification and mitigation, sanctions evasion, money laundering and terrorist financing. The agencies are expected to set rules for such cybersecurity standards.

Energy

The Lummis-Gillibrand Act requires research on energy consumption.

The research will seek to identify the best ways to encourage innovation while ensuring that these technologies work with other areas of society, by deploying more Renewable and clean energy and reducing energy waste help the world move closer to climate goals.

This task will fall to the Federal Energy Regulatory Commission, which will conduct the study in consultation with the CFTC and SEC. One of its goals is to analyze the type and amount of energy used for crypto mining.

Taxes

As Senator Lummis previously hinted that the legislation would provide a tax exemption for purchases of up to $200 in bitcoin for goods and services. This measure encourages the use of digital assets as a medium of exchange. However, the bill states that for tax exemption purposes all transactions that are part of the same transaction or series of related transactions will be treated as a single transaction and therefore equivalent to one capital gains number.

The bill further declares that miners shall not be considered brokers,digital assets obtained from mining activities Shall not be considered income until converted into fiat currency.

In addition, the Lummis-Gillibrand Act also stipulates that digital asset lending agreements are generally not taxable events, similar to Securities lending transactions, and certain Decentralized Autonomous Organizations (DAOs) are business entities for tax purposes. However, this requires that the DAO must be established or organized under the laws of the jurisdiction.

Finally, in terms of taxation, the bill requires the US Internal Revenue Service (IRS) to study and clarify issues such as forks and airdrops, Issues such as merchant acceptance of digital assets, mining and staking, charitable donations, and the legal characterization of Stablecoins as debt.

401(K) Pension Plan

The Lummis-Gillibrand Act requires the Government Accountability Office (GAO) to analyze the opportunities and risks associated with pension accounts investing in digital assets.

GAO's findings will be reported to Congress, Treasury and Labor.

Consumer Protection

To strengthen customer protection in the cryptocurrency market, the bipartisan bill would require digital asset providers to disclose information about their products, including source code versions and the legal treatment of each digital asset.

The act also grants individuals the right to retain and control the digital assets they own.

Other Terms

The Lummis-Gillibrand Act also includes provisions for stablecoins, such as requiring issuers to hold USD or USD equivalents that customers can redeem at any time; creating an advisory committee to observe and study the latest developments in the space develop and make recommendations so that regulations remain current; and clearly define the different types and flavors of digital assets and their associated technologies, markets and practices.

Prospect

Gillibrand The senator told CNBC on June 7 that she thinks the bill will have the support of the Senate.

“Our goal is to make sure the bill passes through the four governing committees,” she said, “to establish The regulatory framework takes a long time."

Senator Gillibrand went on to say she wanted the bipartisan legislation It could pass the Senate Banking, Agriculture, Intelligence and Financial Affairs Committees.

“These committees are all only relevant to one part of the bill because they all only regulate one part of the industry,” she added. "Having met with most stakeholders and experts in the industry, we believe this bill will have a lot of momentum. We will work with them long-term to continue to refine this bill."

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