Lummis and Gillibrand want to empower CFTC, treat digitals assets

As excited as Wall Street and Main Street were to have crypto as a new investment idea and store of value, the speed at which cryptocurrencies entered mainstream U.S. markets caused proportionate angst for U.S. regulators, who were equipped only with decades-old securities laws to police an industry many still refer to as the financial “Wild West.” 

But after months of research, industry consultation and bipartisan teamwork, Sens. Kirsten Gillibrand and Cynthia Lummis said Tuesday that they are ready to debut the first major attempt to place guardrails around the nascent industry. 

Their bill, titled the Responsible Financial Innovation Act, amounts to a regulatory overhaul that would classify the vast majority of digital assets as commodities like wheat, oil or steel. As such, the bipartisan legislation would also leave the bulk of the oversight responsibility to the Commodity Futures Trading Commission and not the Securities and Exchange Commission, as some had expected.

Gillibrand, a Democrat from New York who sits on the Senate Agriculture Committee, and Lummis, a first-term Republican from Wyoming on the Banking Committee, said the legislation is the culmination of months of collaboration in the House and Senate and represents a critical first attempt to structure the markets for digital assets with long-awaited legal definitions. 

Their offices touted the bill as “landmark bipartisan legislation that will create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law.” 

The cornerstone of the legislation is how it defines the vast number of digital assets available to American investors and consumers. 

With few exceptions, the bill designates digital currencies as “ancillary assets,” or intangible, fungible assets that are offered or sold in tandem with a purchase and sale of a security. 

Staff to Gillibrand and Lummis explained that their law treats all digitals assets as “ancillary” unless they behave like a security a corporation would issue to attract investors to build a capital pool. 

Cryptocurrencies and other digital coins won’t be treated like traditional securities under SEC scrutiny unless they entitle the holder to the privileges enjoyed by corporate investors like dividends, liquidation rights or a financial interest in the issuer, the offices told reporters. 

They added that the bill is a product of months of discussion with fellow senators, including Republicans Minority Leader Mitch McConnell and Pat Toomey, as well as Democrats like Ron Wyden. 

Rep. Ro Khanna, a Democrat who represents Silicon Valley, also weighed in. 

“My home state of Wyoming has gone to great lengths to lead the nation in digital asset regulation, and I want to bring…