United States Senator Cynthia Lummis pushes her bipartisan bill titled ‘Responsible Financial Innovation Act’ in the wake of FTX collapse and events that led to its demise.
In an interview with the Financial Times, Lummis stated that she wants stronger regulations for firms like FTX since they trade, hold client assets, and engage in lending methods like rehypothecation, which allows for multiple loans of the same asset.
During the month of June, U.S. Senators Kirsten Gillibrand and Lummis announced a bipartisan bill in an attempt to regulate the crypto industry by classifying them as commodities.
The Responsible Financial Innovation Act classifies the vast majority of digital assets as commodities, which would be regulated by the Commodity Futures Trading Commission (CFTC) and not the Securities and Exchange Commission (SEC).
Lummis noted she is extremely hopeful that her bill, which is in the Senate finance committee, would be high on the agenda for legislation in January.
In order to ensure that her bill wouldn’t open doors for certain non-crypto companies to dodge regulation, Lummis disclosed that she is collaborating with the US Securities and Exchange Commission.
The senator added that her legislation would forbid the mixing of client assets and exchange-owned investments. Lummis stated that her bipartisan bill’s definitions of digital assets could be tightened.
A copy of the Digital Commodities Consumer Protection Act (DCCPA) bill, which describes how the CFTC will oversee the cryptocurrency industry, was leaked in October. This legislation is currently being worked on.
Since its introduction, FTXs Sam Bankman-Fried and Coinbase have expressed open support for it. However, centralized firms like Coinbase and FTX came under fire for their backing of a proposal that has been perceived as a danger to the industry’s decentralized protocols.
Lummis noted “FTX was heavily involved in drafting the bill. That bill needs to be rewritten in a way that is more effective and neutral as to business models, but very, very focused on consumer protection.”
The FTX collapse triggered the need for crypto regulation and the community is hoping for a proper legal framework from the lawmakers that won’t adversely affect in crypto sector in the long run.
Lummis added “The FTX failure, had they been complying with the regulatory regime in our bill, would not have happened. Their customers need to know that when a customer allows someone to custody their asset — that their custodied funds will be segregated from other monies, so when it goes into a bankruptcy or everything goes wrong, the customers’ money is protected and not commingled with the mismanaged business entity’s liabilities.”