Congress considers crypto legislation: What you need to know

Jun 20, 2022, 6:15 PM | Updated: 8:16 pm

MIDVALE, Utah — One word can describe the year, so far, for cryptocurrencies — ugly. After reaching record heights this past November, crypto has lost $2 trillion of its market value. Many experts chalk the mass sell-off to investors, fearing a recession, switching to less risky assets. Now, Congress is mulling over the Responsible Financial Innovation Act, a proposed groundwork for regulating cryptocurrencies.

“It’ll help investors to understand the risks, hopefully,” said freelance writer Brian Nibley.

While Nibley is not a financial advisor, he has covered cryptocurrencies for years. He said one thing the new bill does is it sets legal definitions for key words such as digital asset, smart contract, virtual currency, and others.

“It does provide a lot of clarification, particularly for institutional investors who have just been waiting for this for a long time,” he said.

The bill also defines most cryptocurrencies as commodities instead of securities. Nibley said that is important because it determines what agency will be largely responsible for regulating crypto.

“A commodity would be regulated under the CFTC (Commodity Futures Trading Commission), securities regulated under the SEC (U.S. Securities and Exchange Commission).”

And that is a big sticking point for the bill’s critics. They argue the CFTC is just too small. It does not have anywhere near the clout and ability as the SEC to fight cryptocurrency fraud, they say. But crypto insiders argue the commodity designation opens the door to faster growth.

“It’s not really regulation in the sense of clamping down on anything or stifling innovation or anything like that,” Nibley said of the bill.

The legislation also includes a tax benefit that could help businesses, like Bernie and Brothers Barbershop, that take crypto.

“I think it will be pretty commonplace at some point,” owner Bernie Hiatt said about cryptocurrency adoption.

When KSL met her last year, we were only her second customer to pay in bitcoin. In the new bill, buying goods or services under $200 with crypto would no longer require filing a report to the IRS. That makes buying stuff like a haircut with bitcoin, easier.

“She may have a few more customers if this passes,” Nibley said.

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Congress considers crypto legislation: What you need to know