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Consumer advocates in Washington reject bill that would regulate crypto industry

June 7, 2022, 7:19 PM UTC
Updated June 7, 2022, 7:23 PM UTC

The wide-ranging crypto bill introduced Tuesday by U.S. Senators Cynthia Lummis and Kirsten Gillibrand didn’t draw any praise from consumer advocate groups.

“The bill gives the industry what it wants most: the Commodities Futures Trading Commission (CFTC) as its primary regulator, even though it exists to police markets where physical producers and purchases of commodities like corn, wheat, oil, natural gas, hogs, and cattle hedge their price risk to facilitate the delivery of everyday goods to the American people,” said Dennis Kelleher, CEO of Better Markets, a Washington-based group that often seeks to counter financial industry lobbying.

Kelleher noted that the crypto industry wants the CFTC as a watchdog because it’s the smallest regulator with the smallest budget.

Lummis (R-Wyo.) and Gillibrand (D-N.Y.) released their long-awaited legislation—the Responsible Financial Innovation Act on Tuesday. While it’s not expected to get serious consideration in Congress before next year, it represents a comprehensive and bipartisan attempt to regulate much of the industry. The bill would favor CFTC as the primary regulator for much of crypto, eliminate taxes on small purchases of goods and services, set rules for stablecoins and establish a regulator-approved “sandbox” for the industry to try innovative products without the worry of government sanctions.

“Too many lawmakers are rushing to introduce legislation that, in the name of fostering innovation, could legitimize bad actors and bad practices,” said Mark Hays, a policy analyst for Americans for Financial Reform. “Just because an industry that pumps millions into the political process claims it is innovative does not mean it deserves its own special rulebook.”

For their part, crypto industry groups applauded the proposal, with Kristin Smith, the executive director of the Blockchain Association, calling it “a major step forward for the crypto industry in Washington.”

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