Proposed U.S. Legislation Would Treat Crypto As A ‘Commodity’

New legislation being proposed in the U.S. seeks to treat %Cryptocurrencies as a “commodity” rather than as a security or stock, and bring regulatory oversight to the sector.

U.S. Senators Kirsten Gillibrand and Cynthia Lummis have introduced legislation called the “Responsible Financial Innovation Act” that would classify the majority of digital assets as commodities such as wheat, oil, steel or gold.

The bipartisan legislation would also leave oversight responsibility to the U.S. Commodity Futures Trading Commission (CFTC) and not the U.S. Securities and Exchange Commission (SEC) that regulates Wall Street.

Gillibrand, a Democrat from New York who sits on the Senate Agriculture Committee, and Lummis, a first-term Republican from Wyoming who serves on the Banking Committee, said the legislation represents an attempt to structure the markets for digital assets with long-awaited legal definitions.

The cornerstone of the legislation is how it defines the vast number of digital assets available to American investors.

With few exceptions, cryptocurrencies and other digital assets won’t be treated like traditional securities under SEC scrutiny unless they entitle the holder to the privileges enjoyed by corporate investors such as dividend payments, liquidation rights, or a financial interest in the issuer.

The CFTC and SEC together regulate wide swaths of the U.S. market and act as two powerful regulators. The CFTC oversees the purchase and sale of raw commodities such as corn, coffee, gold, and oil, while the SEC polices companies, executives and securities that seek to raise capital from the public.

While it is up to Congress to decide how government agencies police U.S. markets, SEC Chairman Gary Gensler has led a public crusade in support of tighter cryptocurrency rules.

It remains to be seen how much traction the proposed legislation will get in either the U.S. House of Representatives or the Senate. There is no guarantee the legislation will be passed into law.

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