Sweeping US crypto legislation targets stablecoins, mining

A sweeping bill from a bipartisan Senate duo would buttress rules pertaining to some of the hottest issues facing the crypto industry, including sanctions compliance, stablecoin oversight and energy usage.

The legislation, introduced Tuesday by Wyoming Republican Cynthia Lummis and New York Democrat Kirsten Gillibrand, is one of the most ambitious attempts to regulate the volatile asset class. While chances of passage are slim ahead of November’s midterm elections, it could act as a starting point for negotiations next year.

The lawmakers have been drafting the plan for months, and it was widely anticipated to be favorable to crypto firms because of Lummis’ reputation as an industry ally. Both senators said in statements that it’s important to create guardrails for the industry and ensure consumers are protected, while also allowing room for innovation to flourish.

Here are some highlights of what’s in the Lummis-Gillibrand bill:

• A requirement that stablecoin issuers maintain 100% reserves and publicly disclose the assets backing their token. Stablecoins have been in focus following the implosion of popular coin TerraUSD.
• Tasking U.S. Treasury with developing guidance to clarify the responsibility of stablecoin issuers to comply with sanctions.
• A requirement that the Federal Energy Regulatory Commission — in consultation with the Commodity Futures Trading Commission and the Securities and Exchange Commission — analyze and report on energy consumption in the digital-asset market, including the amount used for activities such as mining. Environmental groups have been calling for both federal and state policymakers to crack down on Bitcoin mining.
• A directive that a government watchdog study the opportunities and risks of investing retirement savings in digital assets.
• Tasking the CFTC with more authority to regulate coins categorized as commodities directly, which is something crypto exchanges and other firms have supported.
• The creation of an advisory committee — comprised of private and public sector members — to help the government keep pace with changes and provide recommendations.

The two senators said in an interview on CNBC that they will continue to work with other lawmakers and regulators, including the SEC and CFTC, as they try to move their bill through Congress. Lummis said she’s meeting with SEC Chair Gary Gensler this week to discuss crypto regulation.

The legislation — which could be broken into smaller bills — would likely have to clear at least three different Senate committees before being brought up for a full chamber vote.

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