‘What’s nice is that this creates a foundation upon which we can all read and talk, and my hope is that over the next 12 to 24 months, if we all work together, we can get to a point where we finally get something passed and then it’s done. We actually have a foundation of regulation that’s not intrusive and that allows us to innovate as an industry and be able to build great things. I think with a few more iterations and a few more converging factors, we really can get to something where the United States has the best regulation in the world for cryptocurrencies, and this will lead to the creation of thousands, if not tens of thousands, of high-paying jobs and billions of dollars, if not tens of billions of dollars’. – Charles Hoskinson
The much-awaited Lummis bill on cryptocurrency regulation has dropped. According to CoinDesk, the wide-reaching bipartisan crypto bill emerged on Tuesday from Republican Senator Cynthia Lummis and Democrat Senator Kirsten Gillibrand. Lummis and Gillibrand want to see the implementation of a comprehensive set of regulations across digital assets in the United States.
The bill will cover everything from clear definitions of some of the often mixed up terms in the digital asset space. It would also ensure that U.S. investors don’t have to pay taxes on small-scale purchases of goods and services of less than $200. In addition, it would grant new powers to the commodity futures trading commission. Gillibrand is on the agricultural committee that oversees commodities and the CFTC, while Lummis is on the banking committee that oversees the Securities and Exchange Commission. So the responsible financial innovation act might actually have a fighting chance of scaling the many hurdles before it. As a result, one of the foremost crypto industry leaders, Charles Hoskinson, the founder of the Cardinal Blockchain, has reacted to the legislation. With this wide-reaching bipartisan bill and the general change in attitude towards the crypto industry in Washington. Hoskinson believes we could be drawing closer to a period where the United States has the best cryptocurrency regulation in the world. As a result, Hoskinson sees a massive tsunami of funds entering the crypto space pretty soon.
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‘You’ll see this responsible financial innovation act has dropped from senators Gillibrand and Lummis. Cynthia’s one of my senators in Wyoming, and she is known to be a great crypto advocate and has for a long time been a big fan of our industry, but of course, as a lawmaker, she has a responsibility and a moral obligation to make sure that the industry is well regulated. So she’s been working with you for quite a bit of time and trying to understand what the best approach is to regulate the crypto industry in a way that protects consumers but doesn’t disrupt the marketplaces or favours one actor over another actor or promotes regulation through enforcement, where instead of we all knowing the rules, the rules are unclear and then it’s whoever gets hit by the watchdog is the loser of the year, which is what’s been going on right now. So she’s working with Christine Gillibrand, who’s a democratic senator from the state of New York. And her office, Lummis’s office, reached out to us in December of last year. We’ve had numerous conversations and I know that they’ve had numerous conversations with tons of leaders in the cryptocurrency space, and they put together a comprehensive piece of legislation.
So here’s the summary of it. The summary is about six pages long, and the whole bill is quite large. The copies that we got were over 140 pages and when we saw them, actually just a few weeks ago when we were in DC, you know, it was still growing and still changing, but it covers all kinds of things. So title one covers definitions, title two responsible tax for digital assets different sections, de minimis exclusions, broker clarifications ,trading safe harbour for non-us persons to supply autonomous organizations digital asset lending agreements The IRS and RIAA guidelines, you have digital asset mining and staking guidance, then there are conforming amendments, then there’s stuff on the security side, and it creates a lot of legal classifications. And what they do is they basically kind of talk about the Howie test, and they talk about its relationship to commodities, and basically what they do is they create a situation, where things that are obviously a commodity, ought to be a commodity, and things that are behaving like securities, should be securities. So it’s not saying nothing is a security or nothing is a commodity, but it kind of clarifies this a little bit, section 301, 302, 303, 304, and so on.
Then under Title Four, which covers commodity innovations, it gives a lot of definitions. There are a lot of jurisdictional considerations and they actually reference. One of my favourite bills is HR 7614, which is this bill right here, which actually is the digital commodity exchange act, which again is a big step forward in innovation and how one would regulate a cryptocurrency. So there’s a bunch of stuff for stable coins and it says, by the way, if you claim to be asset-backed, you really need to make sure that your assets are backed and there needs to be checks and balances there because you’re in a position of trust. You’re not a full cryptocurrency. Your only reason you’re valuable is that people trust that you do something, and they can’t see that with the code. Then they put in a consumer protection issue, payments innovation section, and a banking innovation section.
I think there’s a very strong desire to actually solve the problem. It’s not a perfect bill, there are a lot of things that need to be discussed and worked out, and the reality is that I think there’s going to be a convergence of forces.
So this bill, combined with Biden’s executive order and the things that will come out of that working group, are probably going to smash into each other, and there’s going to be a big, massive discussion in the industry as a whole, and I think what’s going to end up happening is that, through iterations, the industry is going to converge to kind of a canonical bill. And then it’s just a question of how the hell do we get that thing passed? If we get it passed, it will give us the clarity that we need as an industry to really stabilize everything, and it’ll still take care of bad actors. And there are certain things I really care a lot about, like I really want a cryptocurrency user, consumer bill of rights. I really care about a definition of decentralization, so we can actually get to a sufficiently decentralized
And also, there are a lot of transnational discussions that need DDB, about algorithmic law and algorithmic compliance and so on. But this is a massive step forward, and frankly, it’s an example of where Washington actually listened to the industry and engaged with people, and it didn’t bias it towards one crazy standard or another and a lobbyist hasn’t gotten hold of it and turned it into some toxic monster that only benefits one actor over another’.
In his broadcast Hoskinson speaks further about the future of the bill and the probability that it will pass in its current state. He explains that a lot of work still has to be done in the background by members of the various committees and the executive arm of government.
However, Hoskinson is optimistic that the legislation has laid the proper foundation for the type of legislation that can significantly impact the crypto space and make it more profitable for all players in the United States.
‘It’s unlikely in its current form to go through four different committees, and that’s very, very hard. And obviously, there’s going to be a lot of conversations and a lot of work behind the scenes to see what’s necessary there. And it’s unknown whether the executive branch fully supports this or not, but I do know that there have been conversations between the legislative and executive branches, but I do believe they’re waiting for their clarity to come before they have an official position, but what’s nice is that this creates a foundation upon which we can all read and talk.
And if you know, take a look at the links in this video or just google the bill’s name or take a look at a coin desk article. You can read it yourself and have your own opinion, and my hope is that over the next 12 to 24 months, if we all work together, we can get to a point where we finally get something passed and then it’s done. We actually have a foundation of regulation that’s not intrusive and that allows us to innovate as an industry and be able to build great things. It is now the end of the beginning. There will be some bills that get passed. If not in this house in congress, than in another one, but some bill will pass at some point. It depends on the politics and we’ll just see how things go, but we, as citizens, supposedly are in control of our government, so we have let our voice be heard and let our voice be known that regulation through enforcement is a terrible precedent and systemically damaging to the industry. You need to have the legislative branch do its job and create the framework for necessary for us as entrepreneurs to click into.
It is necessary for us as entrepreneurs to click into nothing in this bill. It would be difficult for me as a company to do anything. I’m a software developer, and there are plenty of things that would make our lives a lot easier, make the industry’s lives a lot easier, and stop costing jobs and innovation to other people. All things considered, I’m pretty happy today. And I’m excited to see that alums of staff, I think, are going to be at consensus and doing some presentations there and then we, as an industry, now have to show up because they showed up. We asked the lawmakers to come and give us their best ideas, and now it’s our job as an industry to go up and read these things and really go deep and have a great conversation and, I think, a few more iterations and a few more converging factors. We really can get to something where the United States has the best regulation in the world for cryptocurrencies and this will lead to the creation of thousands, if not tens of thousands, of high-paying jobs and billions of dollars, if not tens of billions of dollars of economic growth in the very short term and, over the long term, the creation of the next Microsofts, Apples, and Googles, but built with decentralized principles.
As always, I have a lot more work to do. As always, some people are going to have some issues. As I mentioned before, there was a lot of lobbying from certain bitcoin maximalists to basically legislate the destruction of their competitors by calling anything but proof-of-work security, which was bizarre and counterproductive, but lucky for us, stronger minds prevailed and we now have a better foundation to stand on. And I think it is a balanced approach because since the end of the beginning’.
Since the Lummin and UST collapse, there has been renewed vigour about getting appropriate legislation for the crypto space. Last week, we saw Japan take the first bold step toward getting adequate protection for investors interested in stable coins. During the immediate aftermath of the collapse, we also heard Treasury Secretary Janet Yellen say that suitable regulation has to be implemented for the crypto space before the year ends. Also, countries like the United Arab Emirates and Japan are taking giant strides when it comes to digital assets. So there are a lot of incentives for the executive and legislative arms of the United States government to really look into the cryptocurrency space and get some real work done. What do you think about the Hopkins broadcast and the recently proposed bill?
[This article is a transcription of a video made by Savvy Finance]
Original video: https://youtu.be/ONyygu1AhcQ]
