US Sens. Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) have introduced a bipartisan bill aimed at providing a comprehensive federal regulatory framework for cryptocurrencies.
The Responsible Financial Innovation Act, which is the first effort of its kind, proposes legal definitions of digital assets and virtual currencies, would integrate them into existing tax and banking laws, and distinguish between cryptocurrencies that are commodities or securities.
Finally, financial innovators and investors alike will have some guidance on the status of these pioneering new digital assets, and consumers will be liberated from concerns about taxes on transactions below $200. This move paves the way for mass adoption and for cryptocurrencies to operate as real currencies.
This is welcome news for sure, but investors and innovators alike should be forewarned that the odds of this bill passing in the current Congress are slim. This is better understood as the first step in a long and winding road that will hopefully end with greater clarity over the emerging market sector.
The bill calls for the creation of a self-regulating professional organization like the Financial Industry Regulatory Authority (FINRA). Those organizations have been effective in well-established spaces like brokerage and exchange markets, but they are unlikely to be an effective check against fraud in the Wild West of crypto innovators.