- Senators Kirsten Gillibrand and Cynthia Lummis yesterday released a long-awaited strategy for dealing with the cryptocurrency sector
- The Lummis/Gillibrand crypto bill would see spot assets treated as commodities, miners receive tax breaks, and transactions up to $200 be tax-free
- The bill faces almost certain defeat in a Democrat-controlled senate
Senators Kirsten Gillibrand and Cynthia Lummis yesterday released a long-awaited strategy for dealing with the cryptocurrency sector, and it includes some very interesting proposals, from wiping away tax for transactions under $200 to tasking the CFTC with regulating the spot market. Here are the four biggest talking points from the Lummis/Gillibrand crypto bill.
CFTC To Oversee Spot Market
Under the bill, the spot crypto industry would be overseen by the Commodity Futures Trading Commission (CFTC) not the Securities and Exchange Commission (SEC) as it is presently. Tokens that are sufficiently decentralised would be treated as commodities like gold or wheat and would fall into this category. The two agencies recently announced that they were going to share the burden of crypto regulation.
Infrastructure Bill Revisions
The Lummis/Gillibrand crypto bill would establish limitations to last year’s deeply unpopular Infrastructure Bill that requires cryptocurrency brokers, including miners, to hand over certain information to the Internal Revenue Service. This provision was heavily criticised because many of those impacted have no way of collecting such information.
Tax-free Transactions Up To $200
The bill would also shield investors from capital-gains taxes when they use cryptocurrencies to buy goods and services, up to a limit of $200 per transaction. This would encourage the use of cryptocurrencies as a currency and would eliminate the need to keep tax records on simple transactions.
Crypto Miners Get Tax Break
The Lummis/Gillibrand crypto bill would see cryptocurrency miners avoid paying income tax on mined coins until they liquidate them into cash, a favourable tax rule compared with other kinds of property. This rule has already been labelled “a giant loophole in the tax code” by Todd Phillips, director of financial regulation and corporate governance at the Center for American Progress.
Stablecoin Governance
The bill calls for “100% reserve, asset type and detailed disclosure requirements for all payment stablecoin issuers” in order to avoid another Terra UST debacle. A new framework for banks and credit unions would be established with the intention of giving credible stablecoin issuers a chance to compete with existing banks and credit unions.
Lummis/Gillibrand Crypto Bill Faces Defeat
The Lummis/Gillibrand crypto bill has already received heavy attention in the press, much of it sceptical given that it gives those in the crypto space a break, and it has little chance of success in a Democrat-controlled senate; Democrats are fiercely anti-crypto and will not vote for a bill that gives any kind of incentive or break for operators in the space.
Still, it’s nice that people in positions of power are still pro-crypto enough to even bother with such niceties in the first place.
