A new, far-reaching bill on the regulation of crypto in the United States has been announced. The legislation is going to give clarity to both regulators and crypto companies. This is needed to break all kinds of deadlocks, for example that of the long-awaited Bitcoin ETF.

The legislation, called the Responsible Financial Innovation Act, is far from final and still needs to be guidedthrough four congressional committees before it gets to the Senate. What helps is that it is a bipartisan billshaped by Republican Senator Cynthia Lummis - a strong supporter of Bitcoin - and co-author Gillibrand, a Democratic senator.

• The law gives citizens the ability to self-custody their own crypto and thus have full ownership of their money.
• Most major crypto currencies will be characterized as commodities rather than securities. At the veryleast Bitcoin and Ether. This is good for clarity and will eliminate a lot of headaches for some project teams. Being branded as a security would lead to legal action because the issuance of coins was done without a license. However, these non-securities will be strictly monitored by the SEC.
• The division of powers between the financial watchdogs SEC and CFTC is becoming clear: the former will do digital commodities, the latter digital securities. Good news for overworked SEC members.
• The law encourages using BTC and other crypto as a means of payment. Up to $200 can be transacted in exchange for goods without being taxed.
• Stablecoins must be 100% backed by collateral. Banks are allowed to start issuing stablecoins but also present companies like Circle and Tether are allowed to continue doing so - provided they are properly audited and can prove their reserves.
• Consumers of crypto exchanges will be protected in case of bankruptcy of the crypto exchange in question. This was unclear until now.
• Crypto exchanges will be supervised by the CFTC to prevent malpractice. The CFTC may levy a small commission (!) on the exchanges' profits in exchange for their
• There will be a study on how Bitcoin and other proof-of-work crypto can contribute to meeting climate goals by encouraging the production of more renewable energy.

Clarity for investors

Besides the crypto sector itself, clarity is also needed for investors. That seems to have arrived with this legislation. The crypto sector is making a substantial move from Wild West to regulated. Most institutional players have not ventured into crypto until now, partly because of the regulatory uncertainty.

According to analysts, the future introduction of the law also makes it more likely that a SPOT Bitcoin ETF could be approved (it already exists in a handful of countries but not yet in the US). This form of ETF was blocked by the SEC - but the SEC does not have to worry anymore about it after this law: it becomes the job of the other crypto watchdog, the CFTC.