In the midst of the crypto tour, senators are proposing comprehensive oversight

WASHINGTON – Extensive bipartisan legislation unveiled on Tuesday will regulate cryptocurrencies and other digital assets following a series of high-profile busts and failures.

However, it is unclear whether the bill proposed by Sens. Kirsten Gillibrand, DN.Y., and Cynthia Lummis, R-Wyo., Can pass Congress, especially at a time of increased bias ahead of midterm elections. The bill also comes as advocates for cryptocurrency have become bigger – and more free-spending – players in Washington.

The bill, called the Responsible Financial Innovation Act, proposes legal definitions of digital assets and virtual currencies; will require the IRS to adopt guidance on the seller’s acceptance of digital assets and charitable contributions; and will distinguish between digital assets that are goods or securities, which has not been done.

The bill “creates regulatory clarity for agencies that oversee digital asset markets, provides a strong, tailored regulatory framework for stack coins, and integrates digital assets into our existing tax and banking laws,” Lummis said in an email. Stablecoins are a type of cryptocurrency linked to a specific value, usually US dollars, another currency or gold.

Lummis has been a vocal advocate for cryptocurrency development and has invested between $ 150,002 and $ 350,000 in bitcoin, according to her financial revelation.

Legislation imposes disclosure requirements on digital asset firms to ensure that consumers can make informed decisions, delimits agency responsibilities over various digital assets – such as the Commodity Futures Trading Commission’s jurisdiction over bitcoin – and requires a study on digital energy consumption, among many other proposals.

The bill comes at a troubled time for cryptocurrencies, including the meltdown of terraUSD stablecoin and luna in May, the coin intended to buy and sell assets, which are traded at a value of less than a ten thousandth of a cent.

Gillibrand said the bill establishes “a regulatory framework that encourages innovation, develops clear standards, defines appropriate jurisdictional boundaries and protects consumers.”

This development has led legislators on both sides of the aisle to support legislation that examines digital assets more closely.

And crypto lobbying has followed. This year, industry leaders have for the first time flooded money for congressional races and spent $ 20 million, according to registrations and interviews.

Cryptocurrencies have their supporters in Congress. Sen. Cory Booker, DN.J., said at the DC Blockchain Summit in Washington last month that he is attracted to “the exciting potential democratizing effect that can come from creating wider avenues for opportunities for marginalized societies.”

Despite the risk, about 16% of adult Americans, or 40 million people, have invested in cryptocurrencies, according to a September 202 Pew Research Center poll. And 43% of men aged 18-29 have invested in cryptocurrencies.

African Americans are also more likely to invest in cryptocurrencies than white consumers.

President Joe Biden signed an executive order in March, urging the Federal Reserve to examine whether the central bank should create its own digital currency and instructing federal agencies, including the Treasury Department, to study the effect of cryptocurrency on financial stability and national security.

Finance Minister Janet Yellen said in an April April speech at the American University that more government regulation is needed to control the spread of cryptocurrencies and avert fraudulent or illegal transactions.

“We have a strong interest in ensuring that innovation does not lead to fragmentation in international payment architectures,” she said, adding that the Treasury Department will work with the White House and other agencies to develop digital currency reports and recommendations.

———

Associated Press writer Ken Sweet in New York contributed to this report.