The bipartisan Bitcoin and digital assets bill has finally been introduced by U.S. Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY).

The bill is called the Responsible Financial Innovation Act, also known as Lummis-Gillibrand. The bill is intended to encourage “responsible innovation" by integrating digital assets into existing legislation that will provide greater clarity to a largely unregulated industry without standards and defining measures.

Roles of the SEC and CFTC

The bill proposes that the U.S. Securities Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) will act as the two main regulatory bodies to oversee the Bitcoin and cryptocurrency space.

The SEC will oversee and regulate digital assets classified as securities whereas the CFTC will be in charge of overseeing digital assets that receive the commodity stamp.

The legislation also grants the CFTC exclusive spot market oversight over all commodities and ancillary assets. This will require exchanges to register with the CFTC to conduct trading activities and will need to comply with laws in the areas of custody, customer protection, prevention of market manipulation, and information-sharing. 

The bill tasks the SEC and CFTC with studying and reporting on the creation of a self-regulatory organization (SRO) that could complement the regulatory work. 

They have also been tasked with creating a set of cybersecurity guidances for digital asset service providers.

Security Versus Commodity

The bill also attempts to define the terrain between digital assets that are considered securities and assets that are considered commodities. According to the bill, an ancillary asset could be considered either a security or a commodity.

An ancillary asset is defined in the bill as an intangible, fungible asset that is offered, sold or otherwise provided to a person in connection with the purchase and sale of a security through an arrangement or scheme that constitutes an investment contract.

If the digital asset provides the holder with a debt or equity interest in a business entity, liquidation rights or entitlement to interest or dividend payments from a business entity, profit or revenue share in a business entity derived from the work of others, that would be classified as a security. However, there is a flip side to that framework.

Digital assets that are centralized while the value of the asset is determined by the work of participants, but are not debt or equity or do not create rights to profits or other financial interests in a business entity, are not classified as securities as long as disclosures are filed with the SEC twice a year.


The bill will require a study on the power consumption of digital assets. The study will seek to determine how Bitcoin helps society move closer to climate goals by increasing the use of renewable energy sources while reducing energy waste.


The bill encourages the use of Bitcoin and digital assets as a medium of exchange by providing a tax exemption for payments on goods and services up to $200 per transaction.

Lummis-Gillibrand also clarifies that miners are not to be seen as brokers and that digital assets obtained from mining activities are not to be treated as income until they are converted into fiat currency.

Additionally, digital asset lending agreements are not taxable events.

The bill also requires that the U.S. Internal Revenue Service (IRS) investigates events such as forks and airdrops, merchant acceptance of digital assets, mining and staking, charitable donations and the legal characterization of stablecoins as indebtedness.


For retirement accounts, the bill proposes that the Government Accountability Office (GAO) is tasked with analyzing the opportunities and risks associated with investing in digital assets.

All GAO findings will be reported to Congress, the Treasury Department, and Labor Department.


To increase consumer protections, the bipartisan bill will require providers of digital assets to disclose information about their product, including source code versioning and the legal treatment of each digital asset. 

More importantly, the bill also grants the right for a person to self-custody their own digital assets.


The Lummis-Gillibrand bill will require issuers of stablecoins to hold U.S. dollars or dollar equivalents to enable safe off ramping from crypto to fiat for customers at any time.

Final Notes

The comprehensive bipartisan bill is the first of its kind and Senator Gillibrand believes that the bill is something the Senate will get behind. "Our goal is to make sure this goes through the four committees of jurisdiction," she said. "It takes a long time to build a regulatory framework for a new industry."

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