A quick guide to the Lummis and Gillibrand bipartisan Crypto Bill and what it could mean for crypto in the US

The much-hyped crypto bill by US Senators Cynthia Lummis and Kirsten Gillibrand has finally been tabled. Officially named the Responsible Financial Innovation Act, the bill aims to introduce a framework for responsible innovation and regulation in the cryptocurrency sector, say the senators. 

In layman’s terms, the senators want to clear the way for cryptocurrencies in the US. This means detailed categorisation of cryptocurrencies, the creation of a coherent regulatory framework, fair taxation of digital assets, and establishing powers to the regulatory bodies best positioned to oversee this framework. 

It’s a hefty body of work covering just under 69 pages, but fear not, we’ve singled out the important bits below. 

What is a cryptocurrency? 

The bill seeks to provide a clear legal classification for the various types of digital assets, including cryptocurrencies and NFTs. This is ground zero for crypto regulation, as it will ultimately decide how each asset is regulated and who does the regulating. 

To clear any confusion going forward, Senators Lummis and Gillibrand propose that the Howie test be applied in judging whether a cryptocurrency is a security or a commodity. 

Howie who? 

The Howie test is used in the US to determine whether something is being sold under an investment contract, thus qualifying it as a security. 

The test comprises three questions, and if that being sold gets a yes from all three it’s a security and falls under the ever-watching eye of the U.S. Securities and Exchange Commission (SEC). 

The questions: 

  1. Are investors investing with the expectation of profits?
  2. Is the investment in a common enterprise such as a business? 
  3. Do profits come from the efforts of a promoter or third party?

Bitcoin does not meet the last two criteria of the Howie test and is not, and would not be under the new bill, considered a security. But… 

The bill makes a concession for digital assets that are not fully decentralised, like a token issued by a company with a CEO at the helm. It calls for these tokens, and so the company issuing them, to be exempt from classification as a security, as long as it files disclosures with the SEC twice a year.

So, what would a non-security cryptocurrency be categorised as?

The majority of digital assets would be classified as commodities, which will then fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC). Securities will continue to fall under the scope of the SEC. 

Why all the fuss about who oversees what? 

It is assumed that the CFTC will be more open and accommodating to the growth of the crypto market. 

Anything on energy and proof of work?

The bill calls for a study on the power consumption of digital assets to help the industry meet climate goals and encourage the ongoing transition to renewable energy. 


The Senators want stablecoins to be backed 100% by US Dollars or a Dollar equivalent, meaning that the issuer of a stablecoin must hold in its reserve $1 for every unit of that stablecoin in circulation. 


Crypto users will be exempt from capital gains tax for purchases below $200, which is meant to encourage Bitcoin as a medium of exchange. Miners earning Bitcoin won’t have to declare their Bitcoin as income tax until it is converted into Dollars. 

For some perspective, what does it mean when a bill is introduced? 

Not much, actually. It simply means that one or two members of Congress have an idea for how things should work, and that this idea is now open for debate in Congress. The bipartisan bit in the bill means that it was put forward and agreed on by members from opposing parties, in this case the Democrats and Republicans. 

Any member of Congress can introduce a bill. From there, the bill is assigned to a committee(s), which can propose amendments to the bill, after which it goes back to the floor where the bill is put to various votes, including a vote on the Motion to Proceed, and another vote on a Motion to End Debate. Only then is it put to a final vote. 

While this is going on in the Senate, the law is also being debated and contested in the House of Representatives, the other legislative branch of Congress. A law can only be passed if both the Senate and the House of Representatives introduce, debate, and vote on similar pieces of legislation. It eventually ends up on the President’s desk, who has the final say. Considering all of this, this bill still has a long way to go before becoming law. 

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