Last week, Senators Kirsten Gillibrand and Cynthia Lummis introduced a landmark bipartisan bill in the Senate that establishes a comprehensive regulatory framework for digital assets. The Responsible Financial Innovation Act encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. To date, the bill is the most substantial legislation providing much needed clarity to the growing blockchain and digital asset industry. Below are some key provisions in the bill:
Creates a Standard Defining Which Digital Assets Are Commodities Versus Securities
The bill provides standards for defining digital assets as commodities or securities by looking at the purpose of the asset and the rights or powers it conveys the consumer. These definitional standards enable digital asset companies the ability to determine what their regulatory obligations will be and gives regulators clarity to enforce existing securities and commodities trading laws. Notably, the bill calls for most popular cryptocurrencies to be treated as commodities.
Clarifies the Definition of Broker for Digital Asset Reporting
The bill clarifies the definition of “broker” for the digital asset reporting requirement under the Infrastructure Investment and Jobs Act and delays implementation of the requirement to January 1, 2025. The definition of “broker” specifically excludes miners and other validators for income tax purposes and provides that rewards would not be taxable income until exchanged for cash.
