Crypto Bill From Lummis – What’s in it for Investors?

U.S. Sens. Cynthia Lummis and Kirsten Gillibrand proposed a crypto bill on Tuesday, and the news has taken the world of crypto by storm.

As the latest topic for debate, the bill essentially plans to regulate digital assets in the US, through the classification of assets and tax elimination on transactions below $200.

This news has left investors, organizations, and crypto enthusiasts equally startled and there is a mixed bag of opinions revolving around this proposition. Few consider it to be a concerning matter, while others believe the bill will favour crypto growth as well as adoption.

Yes, this bill will affect all of us. But before we get into that, we would understand what this bill is exactly about.

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The Lummis-Gillibrand Crypto Bill

Essentially, the bill plans to segregate digital assets into commodities and securities.

Under the mechanism adopted to segregate these assets: they will be divided into two types, fully decentralized cryptos, and securities.

These decentralized cryptos, such as Bitcoin and Ether will be treated as Commodities. While the others will be termed as securities. The former will be regulated by the Commodity Futures Trading Commission (CFTC), and securities, on the other hand, will be under the regulation of the Securities and Exchange Commission (SEC).

However, that’s not it.

There is also a third asset type that doesn’t carry a sharp classification, and these are called ancillary assets. These assets aren’t fully decentralized, but also don’t check the boxes to be concluded as securities. Solana and Cardano are some examples of the same. Under this bill, these assets have to follow a separate procedure altogether. Including reporting to the SEC on a bi-yearly basis.

The way these asset types will be determined is by treating each asset as an “ancillary asset”, which will be classified to be a commodity by default. This dynamic changes when the asset resembles securities issued by a company or provides exclusive rights of profits to individuals.

Depending on the purpose of an asset, token issuers will now know the kind of asset they are launching before it goes on to list on an exchange.

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Categorization of Assets in Crypto Bill – Would it be Easy?

The classification appears to be pretty simple on paper, but categorizing an asset isn’t as easy as it sounds. Commenting on the same, Tony Tuths told Fortune, “The legislation calls for the CFTC to be the primary regulator, but then carves out a wide swath of tokens that have attributes similar to securities for regulation by the SEC”, “It will be a struggle to decipher what exactly is in the SEC bucket, but it could be the exception that swallows the rule.”

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Under the bill, the CFTC will be given authority over spot markets in crypto commodities.

An additional proposal under this bill is the installation of a new framework for the operations of stablecoins. The bill requires stablecoins to hold 100% reserves in high-quality liquid assets and to supply public disclosures on a regular basis.

Banks will follow an entirely new structure to issue stablecoins. And the process for other entities to do the same will be comparatively tougher. Although, there won’t be a need for issuers to become depository institutions. This part of the proposal has been put into place so that banks, credit unions and stablecoin issuers have a fair chance to compete in the market.

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Companies that raise funds through digital assets will have to provide certain disclosures to the SEC. This is done to improve transparency in the trading of digital assets, especially those that are widely traded.

What Does this Bill Mean for Investors?

First, the bill is supposed to provide better clarity for people who’ve so far kept themselves away from entering the space. This comprehensive framework will allow new investors to play their hand in the crypto space much more comfortably.

Second, the bill appears to encourage crypto to be adopted as a means of payment. And this is done by eliminating taxes on any transactions below $200. Which was previously a sound inconvenience in the usage of crypto for smaller payments, such as buying a coffee with Bitcoin. Wherein users had tax implications for transactions of such minor value.

Although this is expected to foster the adoption of crypto for daily usage, there are a few disagreements in the community regarding the set limit. Many people on Twitter argued that the limit should be extended to 1000 dollars, while others said there should be no tax on crypto transactions under $10,000.

While these perspectives provide an insight into the utility of this bill, overall, a conclusion can be made that this will lend a significant hand in the adoption of the currency.

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Would the Crypto Bill be Passed and Implemented?

As of now, the bill is just a proposition and yet to be accepted. Multiple bills of a similar nature have been proposed before, and all of them have intended to target a small chunk of the entire ecosystem. This bill, too, has to join hands with them to cumulatively make a significant impact. Expecting the same, this year itself will be irrational.

In order to go through, the bill will have to see the desk of multiple committees in the next session. These include the banking committee, the agriculture committee, and intelligence and financial services. As these committees regulate only parts of the industry, they’ll be having pieces of the bill. And as per Lumis, regulation is important for consumer protection and that’s exactly what this bill intends on providing.


From what we know so far, this bill is sure to advance the integration of crypto into our natural monetary ecosystem. And as per the Senate, the bill encourages responsible financial innovation, flexibility, transparency, and robust consumer protections while integrating digital assets into existing law; which appears to be a healthy case so far.

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The true effects can only be calculated only when the bill goes through.

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