The cryptocurrency industry will be laser focused on Capitol Hill in coming weeks, after Democratic Sen. Kirsten Gillibrand of New York and Republican Sen. Cynthia Lummis said Tuesday they will unveil legislation in June that will create a comprehensive “baseline” for cryptocurrency regulation in the United States.
Appearing alongside Lummis at the DC Blockchain Summit in Washington, D.C., Gillibrand said the bill “will allow this industry to grow, flourish, continue to innovate and allow us to compete worldwide, with the most stable market possible here in the United States.”
The legislation would codify both bitcoin BTCUSD, +0.03% and ether ETHUSD, -2.27% as commodities, and Lummis said ”it is our intent that the [Commodity Futures Trading Commission] take the reins of jurisdiction over those two.”
Gillibrand said the legislation would give the CFTC oversight not only of crypto futures markets, but the spot market as well.
Under current law, the CFTC oversees markets for derivatives based on commodities, but it doesn’t police the markets for those commodities themselves. Critics of the current regulatory framework argue that this leaves little protection for investors who buy and sell cryptocurrencies from individuals or on exchanges.
The bill would keep in place the Howie Test for other cryptos, a doctrine that U.S. courts and regulators use to determine whether or not a financial instrument should be considered a security, and therefore under the jurisdiction of the Securities and Exchange Commission. It would also make clear that miners of bitcoin or other cryptos are not considered broker-dealers and would therefore not be subject to more stringent Internal Revenue Service reporting requirements.
“We’re trying to find the sweet spot between allowing innovation to continue to occur unimpeded by regulation, but to provide a regulatory framework that everyone can understand,” Lummis said. ”Some of the innovation is actually being slowed down due to the lack of regulation.”
While dozens of bills have been introduced in the House and Senate that seek to regulate one part of the crypto industry or another, Gillibrand said she is optimistic that this legislation can garner broad bipartisan support and be signed into law by the end of this year or early next.
“I’m very optimistic … because this bill has been heavily researched,” she said. ”We’ve talked to stakeholders for over a year. We have tried to incorporate all of the business models and asset classes that have been to date created.”
One challenge to passing comprehensive crypto legislation is that several Senate committees can claim jurisdiction over the matter, but Gillibrand noted that her role on the Senate Agriculture Committee and Lummis’ seat on Senate Banking give them sway in two of the most important bodies that would need to approve the bill before the full chamber votes on it.
Lummis said she believes that the SEC will soon approve a bitcoin ETF, a move that could be accelerated if her new legislation creates more robust oversight of crypto spot markets.
“I’ve met with [SEC Chairman] Gary Gensler. We’ve kicked this bill around, and he’s a very knowledgable regulator,” Lummis said. “Behind closed doors, I think he expresses a deep understanding. So, I actually have confidence that the regulatory framework that exists is going to be the right regulatory framework going forward.”