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US Regulators Plan To Treat Most Crypto As Commodities

The first major bipartisan cryptocurrency legislation has been announced by Sens. Kirsten Gillibrand and Cynthia Lummis aimed at taming the "Wild West" of the modern crypto landscape.

The first major bipartisan cryptocurrency legislation has been announced by Sens. Kirsten Gillibrand and Cynthia Lummis aimed at taming the "Wild West" of the modern crypto landscape. The new bill that would classify digital assets as commodities like wheat or oil plans to empower the Commodity Futures Trading Commission to reign in the as-yet untamed industry.

Both officials touted the bill as a "landmark bipartisan (piece of) legislation that will create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law."

This comes amid fears that crypto assets were at risk of being considered securities, opening the door to aggressive punitive actions by the Securities and Exchange Commission, and organisation with a reputation for their heavy-handed approach and potential to devastate existing blockchain-based projects.

The key powers of this legislation are in the designation of digital currencies as "ancillary assets" and the plans appear to intend to treat all digital assets as "ancillary" unless they act in the same way as a corporation and are issued to investors to build capital.

This means cryptocurrencies and other digital coins won't fall under the jurisdiction of the Securities and Exchange Commission unless they include similarities to traditional securities including the distribution of investor dividends.

Gellibrand said the bill was designed to "provide clarity to both industry regulators, while also maintaining the flexibility to account for the ongoing evolution of the digital assets market."

"My home state of Wyoming has gone to great lengths to lead the nation in digital asset regulation, and I want to bring that success to the federal level," Lummis added, "As this industry continues to grow, it is critical that Congress carefully crafts legislation that promotes innovation while protecting the consumer against bad actors."

Will This Save The Markets?

It's unlikely that any single event will turn the crypto markets around in such short order, but positive legislation is a welcome sight for many. With the relief of a possible respite from the overbearing influence of the SEC, there's hope yet for deeper integration of digital assets into everyday life in the months and years ahead with less of the devastating impact that over-regulation means.

This bi-partisan step is the first of many toward the global adoption of crypto-assets. With the United States often leading the pack in terms of global financial regulation, these announcements come as a most welcome sigh of relief that the as yet uncharted crypto frontier may yet be brought to heel under meaningful yet unstifling regulation.

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