What is in the New US Crypto Bill?
There is growing bipartisan support for crypto friendly regulations in the US. In order to push this along, a draft bill was introduced today by 2 senators, a Republican Senator from Wyoming and a Democratic senator from New York. The new bill is titled the “Responsible Financial Innovation Act”
What is the Main Point of the Bill?
The bill intends to clarify regulatory obligations for crypto users. One way in which the bill intends to do this is by clarifying the difference between traditional securities, such as stocks and bonds, and newer digital assets.
This is good news for crypto and digital asset holders as the current laws are still new and confusing. Bitcoin is currently treated as property in the US, instead of currency. Many modest investors are confused by this and may make accidental errors in their tax returns. Hopefully, the bill will address issues such as this.
In order to further regulate these digital assets, the bill recommends that the Commodity Futures Trading Commission (CFTC) have regulatory oversight. This may conflict with current beliefs that the Securities and Exchange Commission (SEC) be in charge of the digital assets. By moving oversight away from the SEC, the bill may be further signaling that digital assets are indeed different than securities, and should not be judged by the same commission.
Additional Points in the Bill
In order to further develop the regulatory framework of digital assets in the United States, the bill includes an abundance of details and key points.
For instance, since the debut of Bitcoin, digital assets have diversified. There are no longer solely virtual crypto currencies that require proof of work. The ecosystem has expanded vastly in the past decade to include proof of stake, stablecoins, NFT, DeFi and more. The bill recognizes the advancement of the digital asset market and includes definitions for items such as “digital asset”, “virtual currency”, “stablecoin”, etc.
Naturally, the government is also interested in the tax revenue that these digital assets can product, and wants to ensure it receives their fair share. Thus, the bill includes several details regarding tax liabilities. For instance, decentralized autonomous organizations (DAOs) will be recognized as business entities for tax purposes. How these DAOs will actually be taxed given their decentralized nature is another case.
How Will This Affect US?
Any bill that introduces additional taxation is naturally viewed as unfavorable by the average citizen. However, hopefully the bill will offer some much needed clarification for crypto investors. The bill’s net value to the average investor is yet to be seen, and it is likely too early to calculate this given the bill is still in its infancy.
For those interested, the bill can be found here.