Monday, November 28, 2022

Broader US crypto law targets stablecoins, mining

A comprehensive bill by a bipartisan Senate pair would support regulations related to some of the hottest issues facing the cryptocurrency industry, including sanctions compliance, stablecoin oversight and energy use.

The legislation, introduced Tuesday by Wyoming Republican Cynthia Loomis and New York Democrat Kirsten Gillibrand, is one of the most ambitious efforts to regulate the volatile asset class.

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Although unlikely to be passed before the November midterm election, it could serve as a starting point for talks next year.

Lawmakers have been drafting the plan for months, and it was widely speculated to be favorable to crypto firms due to Lumis’ reputation as an industry ally.

The two senators said in statements that it is important for the industry to build guardrails and ensure the safety of consumers, while also allowing innovation to flourish.

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Here are some glimpses of what’s in the Lumis-Gillibrand bill:

There is a requirement that stablecoin issuers maintain 100 percent reserves and publicly disclose the assets backing their tokens. The focus has been on the stablecoin since the explosion of the popular token TeraUSD.

Tasking the US Treasury with developing guidance to clarify the responsibility of stablecoin issuers to comply with sanctions.

A requirement that the Federal Energy Regulatory Commission – in consultation with the Commodity Futures Trading Commission and the Securities and Exchange Commission – analyze and report on energy consumption in digital-asset markets, including amounts used for activities such as mining. Environmental groups are calling on both federal and state policymakers to crack down on bitcoin mining.

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There is a directive that a government watchdog study the investment opportunities and risks of retirement savings in digital assets.

Acting with more authority to directly regulate coins classified as commodities, which is supported by some crypto exchanges and other firms.

Creation of an advisory committee – consisting of members from the private and public sectors – to help the government keep pace with changes and provide recommendations.

The legislation – which can be broken down into smaller bills – would have to be approved by at least three different Senate committees before it could be brought up for a full chamber vote.

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