The bill, introduced by Republican Senator Cynthia Lummis, one of the most vocal cryptocurrency advocates in Congress, and Democratic Senator Kirsten Gillibrand, marks one of the most far-reaching efforts ever by lawmakers. to place clear guardrails around the rapidly growing and controversial cryptocurrency markets.
The measure would stipulate that the CFTC, and not the Securities and Exchange Commission, would play the primary role in regulating crypto products, most of which, according to the senators, operate more like commodities than securities. The smaller CFTC is generally considered a friendlier regulator for cryptocurrency, as the SEC has generally found that crypto products must meet a host of security requirements.
The bill is not expected to become law in the current session of Congress, months away from the midterm elections, but its framework could serve as a starting point for future debates about how best to monitor these markets.
“We expect this bill to be the starting point for debate next year, regardless of which party controls the House or the Senate,” wrote Cowen Washington Research Group analyst Jaret Seiberg. “What matters is that there is a bipartisan effort to bring crypto into the existing regulatory regime, although the details are subject to change.”
The senators said the bill was intended to bring certainty and clarity to crypto markets, alongside consumer protection.
Among other things, the bill would establish new rules for “stablecoins,” which are tokens intended to have their value pegged to a traditional asset like the U.S. dollar. These commodities have come under significant pressure lately after a crash in the value of top stablecoin TerraUSD.
The new bill would require stablecoin issuers to maintain high-quality liquid assets equal to the value of all stablecoins in circulation and to publicly disclose those holdings.