ICYMI: Takeaways from Proposed Crypto Legislation

Authored by Makara


Published June 14, 20222 mins

Last week, U.S. Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) released the Responsible Financial Innovation Act, detailing plans for what could be the future of crypto regulation in the United States. The bipartisan bill is packed with proposals and below are five highlights for retail investors and consumers.

Takeaways for Investors

1) Tax exemptions for small payments: Any transaction less than $200 would be tax-free. This means that if you use bitcoin to buy a latte you wouldn’t trigger a taxable event on the sale of that bitcoin. Such an exemption could lead to wider adoption of crypto as a payment method. 

2) Clarifies what is a security: The bill aims to make a distinction between which digital assets are securities and commodities by examining the rights or powers conveyed to the consumer.

3) Gives regulatory oversight to the CFTC: In the past, the SEC has been discussed as the potential regulator of crypto, but the CFTC gets the nod in the proposed bill. (The crypto industry generally views the CFTC more favorably.)

4) Requires stablecoin reserves: Mandates that issuers of stablecoins (cryptocurrencies that are pegged to the dollar, for example) maintain reserves fully backing their digital asset.

5) Establishes definitions and disclosures: Imposes disclosure requirements for crypto firms and creates a set of industry definitions to allow for clear discussions around regulation.

Makara's POV

We welcome this bill as a step towards clearer regulation to guide future industry growth while protecting consumers. We think it'll be some time, and many iterations, until a final bill is passed, but this Senate bill is a positive step forward for crypto innovators and investors.  

Argonaut Asset Management Inc. (d/b/a “Makara”) is a wholly-owned subsidiary of Betterment Holdings, Inc., and an affiliate of Betterment LLC. The above material and content should not be considered to be a recommendation. Makara is an investment adviser registered with the US Securities and Exchange Commission. Registration as an investment adviser does not imply a particular level of skill or training. Makara exclusively provides investment advisory services related to investing in cryptocurrencies and other digital assets.
Makara is not a broker-dealer, exchange, custodian, or wallet provider, and is not intended for frequent trading activity. Investing in digital assets is highly speculative and volatile and Makara is only suitable for investors who are willing to bear the risk of loss and experience sharp drawdowns.
Cryptocurrency is not legal tender and is not backed by the government. Cryptocurrency, (including but not limited to bitcoin and ethereum, and stablecoins such as USDC), is not subject to Federal Deposit Insurance Corporation (“FDIC”) or Securities Investor Protection Corporation protections (“SIPC”).
Descriptions of publicly traded companies or digital assets are provided for informational purposes only as illustrations of themes in the digital asset industry. Nothing contained in this document should be construed as a recommendation or offer to purchase or sell any asset described. Past performance is not a guarantee of future results. For more complete disclosures and information about how Makara works, please visit our Terms of Service and Help Center.
Any links provided to other websites are offered as a matter of convenience and are not intended to imply that Betterment or its authors endorse, sponsor, promote, and/or are affiliated with the owners of or participants in those sites, unless stated otherwise.