Bill Overview
Title: Lummis-Gillibrand Responsible Financial Innovation Act
Description: This bill provides for the regulation of digital assets. The bill delineates the jurisdiction over digital assets held by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). For example, the bill provides that the SEC has jurisdiction over digital assets that provide their holders with financial interest in a business entity, while the CFTC has jurisdiction over digital assets that do not. In addition, digital asset exchanges are allowed to register with the CFTC. Under the bill, depository institutions are allowed to issue payment stablecoins. The bill sets forth requirements, including that institutions must hold in reserves 100% of the value of all outstanding stablecoins and allow stablecoins to be redeemed on a one-to-one basis. The bill also provides for the tax treatment of digital assets, including an exemption from income tax for purchases using digital assets that result in a gain or loss of $200 or less. Finally, the bill provides for various reports, studies, and consumer protection standards.
Sponsors: Sen. Lummis, Cynthia M. [R-WY]
Target Audience
Population: People involved in digital assets
Estimated Size: 73000000
- Digital assets include cryptocurrencies and other blockchain-based digital items, which are held by millions worldwide.
- As of the latest data, it is estimated that over 420 million people worldwide own cryptocurrency.
- In the U.S., about 22% of Americans have reported owning cryptocurrency at some point, which translates to approximately 73 million Americans, based on a U.S. population of around 330 million.
- The bill affects all digital asset users by providing taxation rules, consumer protection, and new regulatory frameworks for exchanges.
- Stablecoin users are particularly impacted due to the new reserve and redemption requirements for institutions issuing them.
Reasoning
- The population distribution for this policy includes individuals who are not overly invested in digital assets but also captures those who are extensively involved. We should include diverse perspectives, such as casual users of digital assets, professionals in the cryptocurrency industry, general investors, and individuals who do not interact with digital assets at all.
- Considering the budget for $75 million in the first year, the policy will likely target infrastructure development, regulatory implementation, and initial consumer protection, meaning direct financial impacts on individuals could be low initially.
- We assume that those more deeply involved in digital assets or those with significant holdings might see medium-level impacts as they adjust to new regulations and benefits. Casual users may experience only minor changes in their habits or well-being.
- By including a mix of individuals directly and indirectly affected, we can showcase a realistic range of impacts while maintaining awareness of the cost and size limitations of the policy.
Simulated Interviews
Blockchain Developer (Austin, TX)
Age: 25 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- This policy is a double-edged sword. More regulatory clarity is great for growing the industry, but how it is implemented will be key.
- I welcome the registration of exchanges with the CFTC, which could increase trust.
- Tax exemptions for small transactions are a relief for daily use scenarios.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Financial Analyst (San Francisco, CA)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 6/20
Statement of Opinion:
- The policy brings some much-needed structure but might stifle smaller innovative players due to compliance costs.
- Consumer protection standards will boost public confidence in digital assets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Graphic Designer (New York, NY)
Age: 29 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 10/20
Statement of Opinion:
- I barely notice regulation unless it directly affects me, but the tax exemption is nice.
- Stablecoin stability could prevent pricing issues I've faced before.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 5 |
Entrepreneur (Miami, FL)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- Relying on stablecoins, the new requirements bring assurance to my transactions.
- Cost of compliance can be a burden on small businesses.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 4 |
School Teacher (Denver, CO)
Age: 40 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 15/20
Statement of Opinion:
- I don't follow these discussions, but education on digital assets could benefit young learners in future economic scenarios.
- Policies adding to consumer protection are generally positive.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Software Engineer (Seattle, WA)
Age: 32 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 5/20
Statement of Opinion:
- Regulations can threaten the decentralized ethos of digital assets, but they are inevitable.
- Focus on protecting the consumer and clarifying tax issues are welcome.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Student (Chicago, IL)
Age: 28 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- Any reduction in transaction costs or simplification of taxes is huge for small fry like me.
- I worry new rules might limit access for educational purposes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Investment Banker (Boston, MA)
Age: 38 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- Regulatory clarity could stabilize some investments, attracting more traditional finance interest.
- I'm not convinced long-term impacts will be beneficial though.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Taxi Driver (Las Vegas, NV)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 18/20
Statement of Opinion:
- I tend to ignore things that don't affect my day-to-day life much.
- I see more young passengers talking about digital cash; sounds like a big tech leap.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Retired (Orlando, FL)
Age: 65 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 0.0 years
Commonness: 12/20
Statement of Opinion:
- This policy seems technical and far from affecting my life.
- I fear any financial system that's not tangible.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 4 | 4 |
| Year 3 | 4 | 4 |
| Year 5 | 4 | 4 |
| Year 10 | 4 | 4 |
| Year 20 | 4 | 4 |
Cost Estimates
Year 1: $75000000 (Low: $60000000, High: $90000000)
Year 2: $77000000 (Low: $62000000, High: $92000000)
Year 3: $79000000 (Low: $64000000, High: $94000000)
Year 5: $83000000 (Low: $68000000, High: $98000000)
Year 10: $89000000 (Low: $73000000, High: $105000000)
Year 100: $100000000 (Low: $82000000, High: $118000000)
Key Considerations
- SEC and CFTC resource needs for jurisdiction and regulation execution.
- Effect on innovation and stabilization in the digital asset industry.
- Impact on tax revenues due to $200 gain/loss exemption.
- Long-term stability and security of stablecoin market under the new reserve requirements.