In an update earlier today, global tech conglomerate Meta shared news of its latest moves surrounding digital collectibles. From September 29th, subsidiaries Facebook and Instagram will now allow users to link their virtual wallets with their accounts and also share non-fungible tokens. Users Across 100 Countries Can Access New Meta Feature Everyone on @instagram and @facebook can now share their digital collectibles in the US, and on Instagram in the previously announced 100+ countries,” Meta announced in a tweet. https://twitter.com/MetaNewsroom/status/1575486040349245446?s=20&t=TpIDHfYcRCtVRMNrwYhWiA…
Senator Cynthia Lummis (R-WY) revealed more information about the bipartisan crypto regulatory framework she’s creating alongside Kirsten Gillibrand (D-NY). The bill will help sort cryptocurrencies under the same regulatory categories as traditional assets, but will apparently not cover NFTs.
Separating the Wheat from the Chaff
In an interview with Axios on Tuesday, Lummis explained that the bill strikes a balance between protecting investors and allowing for innovation. “The innovation in this space is absolutely astounding,” she said.
Lummis is famous for being a supportive political voice for crypto – especially Bitcoin. She is one of three senators that own the asset, alongside fellow Republicans Pat Toomey and Ted Cruz. Last month, the senator predicted that Bitcoin will become a currency “really fast”, thanks to the now “perfected” lightning network.
For now, however, she views Bitcoin as a commodity and intends to regulate it that way in her bill. The Commodity and Futures Trading Commission (CFTC) would oversee BTC and other crypto-commodities for spot and futures trading.
Meanwhile, cryptocurrencies that pass the Howey test will fall to the Security and Exchange Commission (SEC) for regulations. At present, Ripple is knee-deep in an SEC lawsuit surrounding XRP’s security status. which could set a major industry precedent.
The Challenge of Categorization
While Lummis recognizes the legitimacy of cryptos besides Bitcoin, she understands that many of them will die out with time. “Some of them are fraudulent,” she added, highlighting the regulators’ need to “separate the wheat from the chaff”.
“We’re dealing with consumer protection, with privacy, with taxation, with definitions – so everybody’s dealing from the same set of definitions of these assets and these regulators,” said the senator.
The bill will come into effect as “one big piece”, covering many components ranging from commodities to securities, stablecoins, and CBDCs. Furthermore, it may comprise of five to six distinct parts focusing on different committees. However, the text does not explicitly mention NFTs within its text, considering the difficulty of categorizing them.
Lummis clarified that she does not own any NFTs, and only owns Bitcoin. However, she said that she’s keeping a close eye on the broader Ethereum network. She believes its transition to proof-of-stake could impact its regulations.
Overall, the senator believes that President Biden’s executive order “dovetails nicely” with the work she’s doing on her bill. Nevertheless, she plans to tweak the administration’s stablecoin plans to allow certain non-FDIC-approved entities to issue them.
Breaking Past Partisanship
Regarding its chances of becoming law, Lummis does not believe America’s politically-divided caucus will hamper the bill. “Digital assets are non-partisan,” she said, claiming to have found “common ground” between traditionally combative caucus members on the issue.
Considering the recent history from policymakers, it may be easy to infer the opposite. March’s senate bill to employ sweeping sanctions against the crypto industry received support almost exclusively from Democrats. Furthermore, Democrats were behind last month’s letter to the Environmental Protection Agency deriding Bitcoin mining.
Meanwhile, the most crypto-bullish American politicians, from Crypto-mom to the Mayor of Miami, are almost all Republican. Even in Canada, the two most right-leaning mainstream federal party leaders are also the most welcoming to Bitcoin.
In February, senator Cruz hypothesized that “big government” Democrats are opposed to BItcoin because “they can’t control it”.
Nevertheless, Lummis will specifically seek different combinations of Republican and Democrat co-sponsors for each of her bill’s components.
“We hope that will bring in more understanding and buy-in as different committees become more conversant with what is still a very new component of our economy,” she said.