“That’s the starting point for discussions about what the law should look like,” said Miles Jennings, general counsel for crypto and head of decentralization at Andreessen Horowitz, the Silicon Valley venture capital firm that is a major investor and lobbying force in the world of digital assets. . “I think that’s one of the reasons we’re delighted.”
The contents of the bill will likely shed light on who dominates the ever-expanding universe of crypto lobbying. This has already been the source of clashes between the growing set of industry trade associations backed by competing digital asset startups. Aides to both lawmakers’ offices say they’ve been overwhelmed with incoming suggestions on how to tackle everything from crypto exchange regulations to tax policy.
It is one of many crypto bills that lawmakers have started drafting as companies try to influence.
“It’s hard to pay attention to abstract things, and for most members of Congress, it’s been abstract for a long time,” Lummis, who has owned Bitcoin since 2013, told the crowd at the Bitcoin Miami conference earlier this year. year. “That has changed dramatically over the past 12 months – and that’s partly thanks to all of you.”
Crypto skeptics warn that the frenzy over the bill is part of a growing push by crypto firms to convince lawmakers to protect them from regulations that apply to traditional finance.
The two senators are vying to make their respective states hubs for a blockchain-based economy. State legislators in Wyoming have charted an aggressive course in crafting new laws to accommodate crypto banks and decentralized trading platforms. In the Empire State, New York Mayor Eric Adams has sought to attract digital asset companies by investing his first paychecks in bitcoin and ether.
“New York is the center of global financial markets,” Gillibrand said during a POLITICO Live event with Lummis earlier this year. “It’s one of the fastest growing industries that New York definitely wants to be a part of.”
A leaked bill, which Lummis the said date before Gillibrand announced his involvement, sounding alarm bells with the Center for American Progress, a left-leaning think tank. The group’s director of financial regulation and corporate governance, Todd Phillips, said this would have created new opportunities for token-based startups to circumvent securities laws and allowed investors to dodging taxes on crypto transactions where they made less than $600. Securities and Exchange Commission Chairman Gary Gensler has repeatedly argued that most digital assets are likely to fall under his agency’s jurisdiction, putting him at odds with industry executives who want to avoid the agency.
“The challenge of creating digital asset legislation is that most if not everything is covered by existing law. The question then becomes, what are you trying to achieve by writing this new legislation?” said Ty Gellasch, a former SEC official who serves as executive director of investor advocacy group Healthy Markets, said: “The industry effort doesn’t seem to be focused on clarity, but rather on gaps.”
The bill’s scheduled release on Tuesday is likely to spark clashes between industry groups, crypto watchdogs and academics over the details. Along with new rules for trading platforms and crypto service providers, the bill is also expected to cover issues related to cybersecurity, banking regulations, investor protection standards, and stablecoins.
Kara Calvert, head of US policy at publicly traded crypto exchange Coinbase, described both Gillibrand and Lummis as having an “open door” policy when it came to getting feedback on details. She said it puts the congressional staff tasked with drafting the bill in a position where they “balance what their bosses want and what they get from stakeholders.”
An earlier version of the bill included language that would have established self-regulatory organizations for the industry — a proposal requested by the Association of Digital Asset Markets (ADAM) but flagged as potentially cumbersome by the Blockchain Association. ADAM is backed by FTX, a crypto exchange run by political mega-donor Sam Bankman-Fried. Members of the Blockchain Association include trading platforms Crypto.com and Kraken.
“[Lummis and Gillibrand] want to make sure they’re doing it right from an industry perspective and also from a consumer protection perspective,” Michelle Bond, CEO of ADAM, said in an interview. “I just don’t know where it will end up shaking.”
In public appearances, the two lawmakers outlined the policy goals of the bill. They want to exempt Bitcoin miners from the rules for financial brokerage firms and give the Commodity Futures Trading Commission – a smaller sister agency to the SEC that oversees financial derivatives markets – more power to oversee crypto markets.
The details of these provisions will be as important as the main description.
Jennings, along with Andreessen Horowitz, said he expects industry players to be disappointed with how much leeway the bill could give the SEC to decide whether certain digital assets are securities. Crypto executives have criticized the agency’s management for its tough approach to digital currency trading.
Hill staffers who worked on the bill said the SEC and CFTC weighed in.
Crypto attorney Lewis Cohen – who advised Lummis staff on the bill – said it was nearly impossible to balance the concerns of industry bigwigs and regulators.
“By knee-jerk treating all tokens as securities, I truly believe this is both bad legal policy and fundamentally bad for the United States,” said Cohen, co-founder of DLx Law. “But ignoring SEC concerns is a legal mistake and bad for the United States”
Lobbying efforts are likely to accelerate and expand in the coming months. At a recent industry conference in Washington, Lummis and Gillibrand said up to four Senate committees would have jurisdiction over their legislation, if it ever passes.
“This is going to be a big topic of debate,” Blockchain Association executive director Kristin Smith said in an interview. “If it’s a needle that can be threaded, then [it’s] is going to be a really pivotal time for the ecosystem.
Ben Schreckinger contributed to this story.