THIS IS HUGE IF THIS PASSES! READ!

Hey all, just wanted to run over some of the details of this important bill that has been proposed by Senators Lummis and Gillibrand.

The goal of the bill is laid out as the following:

“To provide for responsible financial innovation and to bring digital assets within the regulatory perimeter.” Pretty important goal, let’s see how this plays out, Cotton.

Lots and lots of definitions. Pretty basic and clear for crypto users, but it’s important to have this all laid out in law as having regulation provides a higher sense of security for users.

Taxation of digital assets is discussed and laid out plainly. Looks like it is proposed to be taxed just like stock market is taxed. Taxation of staking, airdrops, mining and the like are discussed and defined and will function just like how the stock market does (with airdrops, taxed based on value on receipt to time of sale).

Digital assets can now be considered charitable contributions and used as tax write offs.

Retirement accounts and digital assets. This is a pretty important section. They propose conducting a study to assess the following aspects of including digital assets in retirement portfolios:

1. Risk

2. Benefits of diversification

3. Operational barriers to investing in digital assets for retirement

4. Consumer education, financial literacy, and investment advisor training relating to digital assets

5. Appropriate allocations to digital assets in retirement portfolios

This report will then be presented to all the major committees : secretary of treasury, secretary of labor, committee for finance, etc etc etc. list goes on.

Ancillary assets: definition update. Ancillary assets are to be considered securities, not commodities. The term ‘ancillary asset’ means an intangible, fungible asset that is offered or sold through an arrangement or scheme that constitutes an investment contract. Here is where things get interesting: this bill updates what ancillary assets do NOT constitute: assets that provide the holder (HODLer lol) with any of the following rights:

1. Debt or equity interest in said entity

2. Liquidation rights with respect to that entity

3. An entitlement to an interest or dividend (staking?) of said entity

4. Any other financial interest in said entity

From this list, I think most digital assets would be crossed off from the security definition and rather be considered commodities.

Now, even if the digital assets are considered ancillary assets, the bill continues to lay out the following: the ancillary assets are to be considered a commodity and not a security.

Mmm, bullish. Hoskinson, you are a smart man.

Title IV: Responsible Commodities Innovation Digital assets are to be overseen by CFTC, not the SEC (as they would not be considered securities).

Then there’s a lot of jargon about how exchanges need to register, definitions of smart contracts, ledgers, and the like. Since this is a bill, it’s necessary to have everything spelled out about how exchanges function, how to report and what to report to CFTC, and all the background boring stuff that happens behind the scenes. Also, there are multiple titles, so the definitions get rehashed multiple times and make the bill painfully long, but still a good read (cuz I like crypto).

There were some sections I didn’t totally understand. On exchanges, it sounded like exchanges will not have the ability to prevent you from withdrawing your assets. Meaning, things like what happened with Celsius and Voyager won’t be allowed to occur provided they’re a registered exchange (they still would have, it just would have been on a ‘first come, first served’ basis). Registered exchanges are also required to establish certain system ‘safeguards’ to prevent things like what happened with Celsius and voyager (bullish!). Not only that, but each exchange will be required to pass certain security requirements in order to prevent all those dang hackers that steal millions! (Also very bullish!)

Some of those safeguards include: automated systems that are secure and scalable, emergency procedures and back up security (if systems go down), and specific exchange security requirements to prevent exploitation (they didn’t go in to detail what those requirements are, just that audits will have to be done).

Title V - Responsible Consumer Protection

This is a very bullish portion of the bill (my phone keeps autocorrecting bill to bull… coincidence? I think NOT!)

Exchanges will be required to announce any changes to their platform prior to the change (sorry CDC, gotta let us know now).

Things they must announce:

1. Exchange fees (oof CDC, another hit)

2. Bankruptcy solvency plan and how it would pan out (well done Coinbase)

3. How customers assets are handled (love this!)

4. Lending is fully disclosed (Algorand, why you lending to HODLNAUT ????????… I still love you)

There’s a lot of public disclosure requirements that I think will entice a lot more users to invest in crypto. All in all, everything I’m reading is very ‘pro-Boomer entering the crypto space’.

Title VI - Stablecoins

In order to keep this post short enough to retain the attention of Reddit users (EMOTIONAL DAMAGE), I’ll skip this section. Nothing super exciting here. Basically stable coins need to be… stable.

Title VII - Responsible Banking Innovation

Findings - Digital assets settle with finality in minutes, whereas banks settle with finality in days (BURN)

Essentially, this section discusses how the central bank should address the following: consumer protection, payment systems, anti-money laundering, and fiduciary activities as it relates to digital assets. Pretty bullish here.

The last section is about interagency cooperativity. Also pretty usual information.

TL;DR: This bill is bullish for crypto. If this passes, there could be a whole new wave of potential investors to enter the space