Bipartisan pair of senators propose new legislation for regulating crypto

Sens. Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) join Yahoo Finance Live to discuss their bipartisan push for new crypto regulation.

Video transcript

DAVE BRIGGS: Bipartisanship, it ain't dead yet. Crypto managed to bring both sides of the aisle together. Two female lawmakers unveiling some legislation today regarding cryptocurrencies. Jen Schonberger has that story for us. Jen, so what are they proposing to do? And do they have any support?

JENNIFER SCHONBERGER: Good afternoon, Dave. Yeah, bipartisanship not dead yet. Senator Cynthia Lummis, Republican from Wyoming, and Kyrsten Gillibrand, Democrat from New York, proposing new legislation today long awaited on regulating the crypto space, opening up the debate for regulators and industry players alike.

The wide ranging legislation deems most cryptocurrencies commodities, including Bitcoin and Ether, and gives the Commodities Futures Trading Commission clear authority over digital asset spot markets, making it the primary crypto regulator, though the Securities and Exchange Commission will still oversee tokens if they are deemed to be securities based on a case law called the Howey Test. That Senator Cynthia Lummis told us earlier that while more cryptocurrencies would likely be governed by the CFTC, many would still be overseen by the SEC.

CYNTHIS LUMMIS: There are thousands of cryptocurrencies, many of which are going to be requiring disclosures through the Securities and Exchange Commission. And they're very good at disclosures. So we hope that we have split, based on a very updated Howey test codification, the clear difference between what is a commodity and what is a security.

JENNIFER SCHONBERGER: To prevent runs on stablecoins like the one on algorithmic stablecoin Terra, the bill bans algorithmic stablecoins by requiring backing of one to one by a Fiat currency. It also requires all issuers to guarantee that stablecoin holders can redeem their tokens in exchange for the equivalent dollar value at any time.

Now lobbyists are encouraged by this bill. They particularly like that every token is a security-- is not a security, I should say, based more on use case. And while lobbyists and analysts are encouraged by this, they don't see this becoming law this year. Senator Lummis told us this morning that she's going to be speaking, along with Senator Gillibrand, with the Senate parliamentarian, to discuss potentially breaking this bill up into pieces so that it can be shepherded more easily and perhaps more quickly through the respective committees. Guys.

DAVE BRIGGS: Very interesting, Jen Schonberger. Thanks so much for that. Both of them said this morning they disagree with the Labor Department. They support what Fidelity is doing in the Bitcoin space.