In a big win for the crypto industry, a pair of senators proposed bipartisan legislation that would drastically reduce the authority of the Securities and Exchange Commission (SEC), grant tax exemptions that would make it far easier to use cryptocurrencies for small, day-to-day payments, and set ground rules for stablecoins.
The Responsible Financial Innovation Act, introduced on Tuesday (June 7), is a piece of bipartisan legislation by Sen. Cynthia Lummis, R-Wyo., and Sen. Kirsten Gillibrand, D-N.Y., that seeks to create a broad and all-inclusive regulatory and legal framework for cryptocurrencies, stablecoins and the decentralized finance (DeFi) market, including tax policy.
Crucially, it would also create a common set of definitions making clear what digital assets, virtual currencies, stablecoins, smart contracts and other key part of the new technology are. It would also create an industry self-regulatory body.
From a payments perspective, two feature stand out. First, the bill would exclude crypto purchases under $200 from having to report capital gains to the Internal Revenue Service (IRS) — a complex task that is currently required for any purchase, even a cup of coffee.
Second, it would require stablecoins to be 100% backed by fiat currency and a limited-but-undetermined set of highly liquid investments such as treasuries.
“The Responsible Financial Innovation Act creates regulatory clarity for agencies charged with supervising digital asset markets, provides a strong, tailored regulatory framework for stablecoins, and integrates digital assets into our existing tax and banking laws,” said Lummis, who is a strong supporter of cryptocurrencies and long-time bitcoin investor.
It also gets into central bank digital currencies (CBDCs) by calling for a study of China’s digital yuan by security and defense agencies. As CBDCs “are growing in prevalence” the release said, “it’s important that the U.S. understands the national security implications of the digital yuan and China’s intention to promote its adoption internationally.”
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