Following a succession of high-profile busts and failures, bipartisan legislation was announced Tuesday that would regulate cryptocurrencies and other digital assets.
However, it’s unclear whether the plan presented by Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-Wyo.) would pass Congress, especially given the heightened partisanship in the run-up to the midterm elections.
The law also comes as proponents of bitcoin have grown in power — and in spending power — in Washington.
The Responsible Financial Innovation Act proposes legal definitions of digital assets and virtual currencies, as well as requiring the IRS to issue guidance on merchant acceptance of digital assets and charitable contributions, which has yet to be done.
It also makes a distinction between digital assets that are commodities versus digital assets that are securities, which has yet to be done.
Lummis said in an emailed statement that the bill “creates regulatory clarity for authorities entrusted with overseeing digital asset markets, offers a solid, specialised regulatory framework for stablecoins, and integrates digital assets into our existing tax and banking legislation.
” Stablecoins are a sort of cryptocurrency that is linked to a fixed value, such as the US dollar, another currency, or gold.
Lummis has been an outspoken supporter of cryptocurrency development, investing between $150,002 and $350,000 in the space.
The bill comes at a challenging time for cryptocurrencies, following the May breakdown of the terraUSD stablecoin and luna, a coin used to purchase and sell assets that traded for less than a tenth of a penny.
“A regulatory framework that stimulates innovation, provides clear standards, specifies appropriate jurisdictional borders, and protects consumers,” Gillibrand said of the bill.
As a result of these changes, lawmakers on both sides of the aisle are supporting legislation that scrutinises digital assets more rigorously.
Lobbying for cryptocurrency has followed suit. According to statistics and interviews, industry leaders have poured $20 million into congressional elections this year for the first time.
Cryptocurrencies have advocates in the United States Congress. Sen. Cory Booker, D-N.J., expressed his interest in “the exciting potential democratising effect that can come from opening greater routes of opportunity for underprivileged populations” during the DC Blockchain Summit in Washington last month.
Despite the hazards, according to a Pew Research Center research from September 2021, around 16 percent of adult Americans, or 40 million people, have invested in cryptocurrency. And 43% of men between the ages of 18 and 29 have invested.
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