A Sneak Peek into the Future of Crypto Regulation

On June 7th, 2022, Senators Kirsten Gillbirand and Cynthia Lummis released their new, long-awaited bipartisan legislation addressing the regulatory and tax treatment of cryptocurrency and digital assets. This legislation, also known as the Responsible Financial Innovation Act (RFIA), provides a framework for how we the people can expect future regulations for crypto to unfold. In total, this proposed legislation consisted of nearly 70 pages of regulatory framework.






Here are some of the main components of the RFIA:

  • Defines notable crypto terminology including:

  • “Digital asset”, “digital asset intermediary”, “distributed ledger technology”, “payment stablecoin”, “smart contract”, “virtual currency”

  • Establishes criteria for a digital asset to be a commodity vs a security:

  • Howey test will be implemented to define which digital assets are commodities and securities

  • Many digital assets, Bitcoin and Ethereum most namely, will now be classified as commodities and overseen by the CFTC

  • Most altcoins and NFTs will likely be defined as securities and will fall under SEC regulation

  • Important because provides future clarity on the taxation and regulatory efforts for the crypto space

  • Establishes tax laws such as:

  • No capital gains tax on Bitcoin payments less than $200 for goods and services

  • Mining and staking will not see tax impact until the digital assets are sold for cash

  • Lending will not be taxed, similar to securities lending transactions are not today

  • Decentralized Autonomous Organizations (DAOs):

  • Must establish as registered business entities

  • Includes exchanges and stablecoin providers

  • Stablecoin regulation:

  • Stablecoin market must have a 100% reserve requirement now

  • Guarantees that consumers will be protected and able to withdraw their stablecoin at any point in time.

  • Ensures that existing stablecoin issuers and new entrants into the market have adequate opportunity to compete with banks and credit unions for issuance of payment stablecoins

Overall, the newly proposed Responsible Financial Innovation Act provides a large sense of clarity to consumers about the future of regulation within the crypto space. Regulation is the next step to unlock the amount of capital on sitting on the sidelines waiting for regulation.


Though this bill will likely be edited and readjusted, this is a huge step in the right direction and provides the market with bullish sentiment moving forward. In the words of Senator Gilibrand, this bill “spurs innovation, develops clear standards, defines appropriate jurisdictional boundaries and protects consumers”. This bill will likely move forward and hopefully pass in 2023.