Wall Street was as excited about crypto as an investment opportunity and store value as Main Street, but the rapid entry of cryptocurrencies into mainstream U.S markets created a lot of anxiety for U.S regulators who had only decades-old securities laws on hand to manage this industry, which many still call the financial “Wild West.” 

However, after months of intensive research and consultation with the industry, as well as bipartisan teamwork, Senators. Kirsten GillibrandCynthia Lummis, Cynthia Lummis stated Tuesday that they will be launching the first significant attempt to put guardrails around this nascent sector. 

The Responsible Financial Innovation Act is their bill. It would allow for a major regulatory overhaul. This would make digital assets like steel, wheat and oil commodities. The bipartisan legislation, which was passed by both parties, would leave most of the supervision responsibility to the Commodity Futures Trading Commission and the Securities and Exchange Commission.

Gillibrand is a Democrat representing New York on the Senate Agriculture Committee. Lummis, a Wyoming Republican, sits on Wyoming’s Banking Committee. They both said the legislation was the outcome of many months of work in the House as well as the Senate. It represents a significant first step to create digital assets markets and provide long-awaited legal definitions. 

They referred to the bill as “landmark bipartisan legislation which will create a complete regulation framework for digital asset that encourages responsible financial innovations, flexibility and robust consumer protections while integrating new assets into existing laws.” 

How it defines and clarifies the many digital assets made available to American investors is the core of this legislation. 

The bill, with few exceptions designates digital currency as “ancillary asset” or intangible and fungible assets, which are sold or bought in conjunction with the purchase or sale of security. 

Lummis and Gillibrand staff explained to Lummis that digital assets are considered “ancillary” under their law unless the assets behave as security issued by a corporation to raise capital. 

Reporters were told by the SEC that cryptocurrencies or other digital coins will not be considered securities as such unless they are entitled to dividends, liquidation rights, or any financial interest in an issuer. 

The senators added that this bill was the result of many months of discussions with other senators including Republicans Minority Leader Mitch McConnell, Pat Toomey and Democrats like Ron Wyden. 

Rep. Ro Khanna was also present. He is a Democrat and represents Silicon Valley. 

Lummis released a statement saying that Wyoming is the leading nation in regulation of digital assets. He also stated that the Federal government should emulate Wyoming’s efforts. It is crucial that Congress craft laws that foster innovation, while also protecting consumers against the bad actors as this industry grows. 

Gillibrand said that “The Lummis–Gillibrand framework provides clarity to industry and regulators while still maintaining flexibility for the ongoing development of the digital asset market.” 

Together, the CFTC and SEC oversee large swathes on America’s markets and serve as Wall Street watchdogs. The first oversees purchase and sales of commodities like coffee, tea, oil, and gold, while the second polices executives and securities seeking to raise capital.

The Congress can decide the way that government agencies enforce U.S. market surveillance, but the SEC, and Gary Gensler as its chair, have led for more than one year the support for tighter crypto rules. 

We don’t currently have sufficient investor protection for crypto finance, issuance trading or lending. Gensler told lawmakers in September. Frankly, this is more the Wild West than the old world, where “buyer beware” existed before securities laws were passed. 

Lummis-Gillibrand representatives stated that they had worked closely with the SEC in developing their plan. They spent many weeks trying to resolve the concerns of the regulator’s lawyers about how the legislation might be applied too heavily. 

Additionally, they stated that the CFTC will use fees received from digital asset issuers as a way to increase its ability to handle what’s likely to be a torrent of regulatory oversight. 

Lummis, Gillibrand, and Lummis both have previous experience with the CFTC/SEC respectively. It was not clear what their views were on Tuesday morning. CNBC reached out to the CFTC and the SEC for clarification but they did not immediately respond. 

Both agencies are important in the U.S. legal discussion on how to delineate cryptocurrencies and other digital assets. 

According to the Gillibrand/Lummis bill, a digital asset is a non-natively electronic property that can confer economic, proprietary, or other access rights. It also includes virtual currency, payment stablecoins, and so forth. 

The definition of virtual currency was later added to the document. 

These definitions are often filled with legal jargon and have an impact on the way digital currencies are regulated. They are therefore of great interest to those in power within the expanding world of cryptocurrency lobbying. 

According to Tech Transparency Project (TTP), the industry employed over 200 people and staff from Congress, Congress and Federal Reserve as well political campaigns. Meanwhile, crypto executives have contributed more than $30 millionThe Federal Election Commission has kept records that indicate the actions taken toward federal candidates since the commencement of the 2020 election cycle.

Lummis, Gillibrand both want to collaborate with other peers in order to transform their states into crypto and blockchain havens. 

New York City Mayor Eric Adams, a New York City Democrat, invested his initial paychecks in bitcoins and ether. In March, Ritchie Torres, a Democrat representing Bronx, stated that the city should and must embrace cryptocurrency if it wishes to continue being the world’s financial capital. 

Wyoming has, however, amended its law to establish a new type of bank charter, the special purpose depository institution. This is to allow crypto-start-ups to access their trading platform. Wyoming continues to be aggressive in diversifying into finance, away from traditional industries such as coal and gas. 

Both senators’ staff highlighted the key elements of the bill during a phone call with reporters. This included tax exemptions which would prevent stablecoin holders having to declare income changes whenever they buy digital currency. 

These disclosures will inform investors about the experience of digital asset developers, their price history, expected costs and the names of management and liabilities for each issuer. 

Although staffers called the bill a combination of input from both politicians and representatives of other political sides, they admitted that the bill’s complexity might force legislators to dissect it and pass each component separately.