New bipartisan legislation from Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wy., aims to create a complete regulatory framework for digital assets such as cryptocurrencies, but the senators emphasized today how the bill also addresses the cyber aspect of digital assets.
The new bill introduced on Tuesday, dubbed the Responsible Financial Innovation Act, has been in the works for months and looks to provide regulatory clarity on the growing crypto and blockchain industries.
With the new bill, Sen. Lummis said there are issues involving “certain cyberattacks” that the senators hope “to send to the committee of jurisdiction that can address the consequences of cyber” regarding the crypto industry.
“Because there is fraud among the more than 10,000 – some people say up to 19,000 cryptocurrencies – yes, some of them are fraudulent,” Sen. Lummis said at a Washington Post Live event today. “That’s why the disclosure capabilities of the SEC [Securities and Exchange Commission] are so important.”
“We want to make sure that this piece of legislation is capable of putting us on a regulatory sound footing so the good guys can continue to operate and flourish, and the bad guys are made to doubt,” she added.
The new bill would require the SEC, the Commodity Futures Trading Commission (CFTC), the Treasury Department, and the National Institute of Standards and Technology (NIST) to develop basic cybersecurity standards for digital asset intermediaries.
In addition, Sen. Gillibrand noted the bill also has a “self-funding mechanism within the CFTC” so that resources can go directly to the agency.
“So, if they are required to do the oversight and accountability for Bitcoin and Ether, and spot markets and futures markets, they have the resources to hire more lawyers, more cybersecurity experts, and build that cyber capability to handle that aspect of digital assets,” Sen. Gillibrand explained during the event.
CFTC Chair Praises Legislation
CFTC Chair Rostin Behnam also spoke at the Washington Post Live event today, where he praised the senators’ legislation, saying “it does a very good job” of giving the CFTC more authority over crypto.
“One of the trickiest things we’re going to have to do – and this has been an issue, and I think they addressed this very well – is deciphering between commodity and security,” Behnam said. “But, in terms of giving us authority within what we call core principles, it would give the CFTC authority to write rules and regulate the stakeholders within the financial ecosystem.”
However, the senators were quick to point out that the CFTC is not the “primary regulator” in their bill.
While the CFTC is tasked with regulating Bitcoin and Ether – which make up the majority of cryptocurrencies today – the SEC also has an “enormous responsibility” to look at many other cryptocurrencies and “anything that looks like a security,” Sen. Gillibrand said.
“We aren’t minimizing the role of the SEC, but we are empowering both regulatory agencies to begin to take this market and give it safety and soundness,” Sen. Gillibrand said.
Sen. Lummis said she met with SEC Chair Gary Gensler yesterday but said he has not read the bill yet. The senator said she and Sen. Gillibrand anxiously await his feedback.