The bipartisan Lummis-Gillibrand Responsible Financial Innovation Act has been updated with additional guardrails to protect cryptocurrency exchanges and digital assets from regulatory overreach. 

The amended bill, if passed, would require crypto asset exchanges, save for some decentralized protocols, to register with the Commodity Futures Trading Commission (CFTC) and not the Securities and Exchange Commission (SEC). 

The CFTC, among added stipulations, would be granted “jurisdiction over all fungible crypto assets which are not securities in addition to the agency’s current jurisdiction over leveraged transactions.” 

The bill also stipulates “all payment stablecoins to be issued by a bank or credit union.” 

This refresh comes after the House of Representatives proposed draft legislation to “create regulatory pathways” for digital assets like Bitcoin.

“Crypto assets are constantly evolving, and as the industry changed during the last year, Senator Gillibrand and I worked to improve our legislation to ensure it appropriately balances consumer protections while allowing innovation to continue,” Senator Lummis said in a press release. “Make no mistake, bad actors exist, but we cannot lose sight of the potential of crypto assets and distributed ledgers to modernize our financial industry. I’m proud to join my friend Senator Gillibrand in reintroducing the Responsible Financial Innovation Act to ensure the United States remains the global financial leader.”  

This comes in the wake of the Securities and Exchange Commission vs. Ripple decision, in which a district court ruled that digital tokens like Ripple (XRP) aren’t all assumed to be securities. One analysis of the ruling said the decision is a rebuke of SEC Chair Gary Gensler’s “regulation-by-enforcement approach” to regulating digital assets. 

I analyzed the original Lummis-Gillibrand bill here at IWF last summer: 

The Responsible Financial Innovation Act (S.4356), co-sponsored by Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), would, if passed, define what a digital asset is for the purposes of federal law and encourage digital asset innovation. With more Americans dipping into crypto investing, legislation like the Responsible Financial Innovation Act will support users seeking out financial freedom.

The bill, as written, recommends that the two major types of cryptocurrency, Bitcoin (BTC) and Ether (ETH), be regulated as commodities under the Commodity Futures Trading Commission (CFTC). All other altcoins and tokens would fall under the purview of the U.S. Securities and Exchange Commission (SEC).

Post-SEC vs Ripple decision, cryptocurrency advocates will continue to win over elected officials through efforts like the Lummis-Gillibrand refresh. 

To learn more about establishing a cryptocurrency framework, go HERE.