In June, the crypto world experienced multiple problems, such as market crashes and lawsuits from regulators. However, two US senators introduced a bill that would help boost the industry's growth by allowing more people to adopt cryptocurrencies.
The bill, introduced by New York Senator Kirsten Gillibrand and Wyoming Senator Cynthia Lummis, aims to reduce the regulatory burden on the financial industry. It also aims to foster innovation. However, some experts are worried that it could allow the authorities to give too much leeway to the fraudsters and financial crime in the industry.
Many experts believe that the bill will not pass before the November elections despite the unfavorable political environment.
Tax filing for crypto
The Responsible Financial Innovation Act aims to help ease the tax filing process for crypto users. It eliminates the need for individuals to report purchases made with cryptocurrencies. It also allows people to use cryptocurrencies without filing a report. The bill was also modified to address the concerns of crypto miners, who were hit with heavy taxation under the previous infrastructure bill.
Although the proposed legislation was praised by crypto users, Omri Marian, a law professor at the University of California, Irvine School of Law, noted that the bill would give a tax preference to cryptocurrencies.
Regulating stablecoins
Following the collapse of the UST stablecoin, which was supposed to hold a dollar peg, many investors became concerned about the potential risks associated with these types of stablecoins. The proposed legislation aims to address these concerns by establishing an oversight framework for these types of stablecoins.
The bill also requires stablecoins to prove that they are backed by US dollars. It also gives the Treasury Department the power to monitor and enforce sanctions against those who operate without following proper procedures. According to Cody Carbone, the Chamber of Digital Commerce executive director, the proposed legislation provides a framework for ensuring that stablecoins are safe and usable.
Environment, retirement inclusion
The bill also addresses the concerns about the environment and the possible inclusion of cryptocurrencies in retirement accounts. The bill will require the Energy Regulatory Commission to lead a study on the mining industry.
The bill asks the government to look into the potential risks of investing in cryptocurrencies in retirement accounts. This issue has been criticized by Senator Elizabeth Warren of Massachusetts.
Due to the increasing number of government agencies jockeying for control over the cryptocurrency market, the Securities and Exchange Commission and the Futures Trading Commission have been criticized for handling the issue.
Opposing government body
One of the regulators who has been critical of the industry is Gary Gensler, the SEC's chairman. Under his leadership, the agency has taken action against various companies, including the Bitcoin-based lending platform BlockFi and the exchange-focused currency Ripple.
Many in the crypto community are frustrated by how Gensler has handled the issue. They believe that the best way to resolve this issue is by having the federal government regulate cryptocurrencies instead of the SEC.
The proposed legislation would give the Commission more power by allowing it to classify cryptocurrencies as commodities. So far, this definition is unclear as to what precisely a cryptocurrency should be called.
In addition, If the government allows cryptocurrencies to be classified as commodities, it will enable investors to easily access the market. It would also allow the creation of a bitcoin ETF, which would promote low-sophisticated investors to participate in the growth of the cryptocurrency industry. However, critics believe that the CFTC doesn't have the necessary resources to combat the various threats in the crypto space.