On June 2, a new bipartisan bill was proposed in the US Congress that would help to define and regulate virtual currencies and other digital assets. The bill was put forward by Senators Kirsten Gillibrand and Cynthia Lummis, representing the Democratic and Republican parties, respectively.
This proposal comes amidst a significant period of volatility in the cryptocurrency market. In May, the crypto world was left shaken when popular stablecoin TerraUSD and its sister crypto coin LUNA both plummeted in value unexpectedly.
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This new bill, the Responsible Financial Innovation Act, suggests that legal definitions for both digital currency and other similar virtual assets should be drawn up. It also calls for a clear distinction to be made between digital commodities and securities, as such differentiation is yet to be delineated.
The Responsible Financial Innovation Act also calls for the Internal Revenue Service (IRS) to take on board instruction on accepting digital assets such as merchant payments and charity donations. It also allocates responsibility for particular digital assets to different regulatory bodies.
Finally, the proposed legislation would require digital asset companies to make sure that crypto consumers are given the necessary information and guidance to make well-informed decisions about their purchases.
At the moment, it is unclear whether or not the bill will clear Congress. While it is true that recent unrest in the crypto market has prompted legislators to more closely examine digital assets and the existing laws around them, there is still uncertainty regarding the bill’s future.
That being said, several congressmen support and even invest in crypto and blockchain technologies. Congressmen such as Senator Cory Booker have publicly advocated for digital currency, expressing optimism about the beneficial impact it could have on society.
Furthermore, there have already been steps toward regulating crypto. In March, President Joe Biden signed an executive order to explore the feasibility of establishing a national digital currency. The order also called for a number of federal bodies to determine the impact of crypto on the country’s national security and economic stability.
In spite of the risks associated with digital currency, around 16% of adult Americans, translating to roughly 40 million people, have put money into the market. Recent studies show that 43% of men between the ages of 18 and 29 have invested in crypto.
Clearly then, cryptocurrency is already popular with the American public and is only likely to become more so. If the new Responsible Financial Innovation Act is put into place, it seems likely that the popularity of digital currencies and other virtual assets will skyrocket.
Furthermore, it is hoped that these new regulations will ensure the safety of new and existing consumers of digital assets and will help safeguard the national economy. Whether or not this new bill is passed, cryptocurrency is on the rise. But introducing new legislation would hopefully decrease the risk of fraud and illegal transactions that come along with it.
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