The Senate's bipartisan duo, Cynthia Lummis and Kirsten Gillibrand, unveiled their latest effort to regulate the U.S. crypto industry, placing greater emphasis on consumer protection following a string of high-profile company failures last year.
Lummis, a Republican from Wyoming, and Gillibrand, a Democrat from New York, first introduced their bill last June. At the time, the popular crypto stablecoin, TerraUSD, had already collapsed but the vast majority of the eventual 2022 turmoil, culminating with the implosion of trading giant FTX, was still to come.
Now, the senators are revamping their prior effort by including measures they say will help prevent another FTX, whose founder Sam Bankman-Fried has since been criminally charged and faces accusations that he mishandled billions of dollars of customer funds. The bill would require firms to segregate client assets and impose third-party custody requirements, according to a document detailing the updates to the legislative proposal. It would also create new advertising standards for marketing crypto and require exchanges to show proof that they have enough assets to cover customer balances.
The effort is ambitious, creating a framework to give the Commodity Futures Trading Commission more authority to oversee certain tokens and addressing everything from sanctions compliance and taxes to stablecoin regulation.
The bipartisan nature of the bill gives it a promising start, but any crypto legislation would have to overcome significant hurdles to get enacted this year. The 2024 campaign season is right around the corner, meaning there's less time to debate complex issues and garner the level of support needed to move this type of overhaul across the finish line. The Securities and Exchange Commission has also pushed hard against efforts to rewrite rules to accommodate the digital-asset industry.
Lummis told CNBC's Squawk Box Wednesday that the bill is necessary to prevent consumers from getting "burned."
"This legislation is not only needed to protect consumers, but so there are rules of the road for these companies," she said.
