Crypto Could Face Regulation as Commodity in New Bill

Digital assets such as Bitcoin or Ether are more frozen concentrated orange juice than financial instruments, according to the latest draft of a newly introduced bipartisan bill called the Responsible Financial Innovation Act.

Responses from Crypto Twitter were generally favorable toward the document, which was introduced by U.S. Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) and provides initial guidance on the regulation of digital assets, treating them as commodities (like frozen orange juice), not securities.

“Great stewards and supporters of the space, thank you for your bipartisan and bicameral efforts on the crypto bill,” said Zhu Su, CEO of Three Arrows Capital, in a tweet.

If passed, cryptocurrency would fall under the purview of the Commodity Futures Trading Commission and not the Securities and Exchange Commission.

The bill also allows for exemptions for people making purchases “in their everyday lives” of up to $200 without worrying about the tax implications of those purchases. It also establishes that miners and valicators are not “brokers” and their income only counts once it is redeemed for fiat. The bill also includes “strong requirements” for stablecoins, in response to the sudden crash of Terra (UST) back in May. 

The bill isn’t without criticism. A leaked copy of the bill made its rounds early Tuesday morning, with most people balking at the requirements needed to operate a DAO or a DeFi protocol. The former would need to register in the U.S. and the latter would be subject to onerous reporting requirements.

The bill also requires two studies: one on energy consumption for the digital asset industry — a frequent criticism of the space; and another on the digital yuan, the digital currency of China.

Since the reveal of the bill, the price of ETH has increased in the past 12 hours from about $1,770 to $1,844 as of 4:45 p.m. ET Tuesday. Bitcoin is up 6 percent to $31,270 in the same time period.