Cynthia Lummis

The cryptocurrency community has been actively discussing the new crypto bill introduced by Senator Cynthia Lummis and Senator Kirsten Gillibrand. The bill sheds light on the regulatory framework for cryptocurrencies within the United States.

Senator Cynthia Lummis introduces a crypto bill

The bipartisan bill supported by the two senators has finally been tabled several months after its first announcement. The bill is titled the Responsible Financial Innovation Act, and its contents seek to promote responsible innovation in the digital asset sector.

The legislation seeks to integrate the existing laws about the cryptocurrency sector to offer much-needed clarity to an industry that has witnessed massive growth. Despite the sector’s growth, it still remains largely unregulated in the US, and there are no uniform standards and measures.

CFTC granted crypto oversight

One of the provisions of this bill addresses the regulatory scope of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) in the crypto industry.

Your capital is at risk.

The 67-page bill tasked the CFTC and the SEC with providing regulatory clarity in the crypto sector. The SEC will regulate the digital assets classified as securities, while the CFTC will regulate the digital assets classified as tokens. These assets include Bitcoin.

The bill also contains provisions that could motivate people to buy Bitcoin and other cryptocurrencies because it ranks some of the largest cryptocurrencies as securities. It proposes to examine the rights bestowed upon the holder of digital assets and the purpose being served by the held assets.

Another provision is the definition of an ancillary asset under the bill. It classified an ancillary asset as an intangible and fungible asset that will be offered, sold, or given to an individual linked to securities trading through a method that could be ranked as an investment contract.

As addressed by the SEC, one of the contemporary issues with digital assets is how the Howey test is conducted to differentiate between securities and tokens. For a digital asset to be ranked as a security, it needs to give the holder a debt or equity interest within the business. It should also bestow liquidation rights or entitlement to interests and dividend payments.

One of this bill’s most talked about provisions is the tax exemption given for capital gains that don’t surpass $300 in Bitcoin used for buying goods and services. This could promote Bitcoin as one of the best utility tokens by promoting it as a medium of exchange. It notes that all transactions that are a part of the same transaction or a series of related transactions will be categorized as the same and subject to a single amount of capital gains.

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