A pair of senators introduced the first major bipartisan proposal for cryptocurrency regulation on Tuesday with a bill that is largely friendly to the industry.
Sens. Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-Wyo.) want the government to treat bitcoin, ethereum and other cryptocurrencies like commodities such as wheat or aluminum — rather than as securities, the senators said.
That would place most major cryptocurrencies under the jurisdiction of the Commodities Future Trading Commission instead of the Securities and Exchange Commission, which has argued that the digital coins should be treated as securities.
Many in the cryptocurrency industry have long argued that the digital coins should be treated as commodities rather than securities.
In a press release, Gillibrand said that the proposal will “establish a regulatory framework that spurs innovation, develops clear standards, defines appropriate jurisdictional boundaries and protects consumers.”
The bill, called the Responsible Financial Innovation Act, would make a number of other tweaks to crypto-related law, including removing a requirement that crypto traders report gains or losses of less than $200 to the Internal Revenue Service.
The bill is unlikely to pass ahead of the midterms and could face opposition from more crypto-skeptical members of Congress including Sens. Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio).
Mark Hays, a senior policy with progressive group Americans for Financial Reform, told the Wall Street Journal that the bill would create a new class of securities without proper investor protections.
“This legislation would do quite a bit to undermine existing securities laws by creating an alternative route that could bypass the current, time-tested rules,” he said.
The bill’s introduction comes as cryptocurrency billionaires play an increasingly large role in political campaigns.
Sam Bankman-Fried — founder of popular cryptocurrency exchange FTX — was one of Joe Biden’s largest donors in the 2020 presidential election and has already donated millions to Democratic candidates in this year’s midterm elections. And pro-cryptocurrency Republican Blake Masters has raised hundreds of thousands of dollars through bitcoin donations and NFT sales in his Arizona senate campaign.
Lummis, for her part, is a big investor in bitcoin. She reported owning between $100,000 and $250,000 worth of the cryptocurrency in her 2022 financial disclosures.
“The United States is the global financial leader, and to ensure the next generation of Americans enjoys greater opportunity, it is critical to integrate digital assets into existing law and to harness the efficiency and transparency of this asset class while addressing risk,” Lummis said in Tuesday’s press release.