Lummis-Gillibrand Responsible Financial Innovation Act

The Bi-Partisan “Lummis-Gillibrand Responsible Financial Innovation Act” (the “RFIA”) announced today by Senators Cynthis Lummis (R-WY) and Kirsten Gillibrand (D-NY) is a truly landmark piece of proposed legislation, which immediately positions the United States at the forefront of the global race to set the regulatory agenda for the rapidly developing blockchain and cryptocurrency sector. The DLx team is thankful for the opportunity to assist in addressing what are some of the most important issues for the blockchain and cryptocurrency sector. For a detailed walk through of the RFIA and its many implications see our memorandum, prepared with our friends FS Vector.

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The RFIA for the first time gathers together nearly all of the policy issues that have challenged both proponents and skeptics of blockchain and Web3 technology into a single, integrated and balanced framework, addressing questions and providing clear thinking on how the use of these technologies can be seamlessly integrated with our existing commodities, securities, banking and consumer protection legislation.

In particular, the RFIA addresses one of the most vexing issues currently facing the digital asset space: How to ensure that market participants and our securities regulatory community receive detailed and accurate disclosures about those digital assets that are widely traded, but in a manner that encourages innovation and does not unnecessarily restrict the activities of those participants who simply use or trade in these assets. Title III of the Act achieves this by requiring companies raising funds through sales of digital assets to furnish to the Securities and Exchange Commission the information needed to allow market participants to conduct thorough due diligence about these companies and assets for so long as the companies are primarily responsible for the success of the projects linked to the assets (sometimes referred to as the project not being “sufficiently decentralized”). Also, while clarifying that most fungible digital assets are properly considered “commodities” subject to the regulation of the Commodities Futures Trading Commission, the RFIA still finds a critical oversight role for the SEC in monitoring disclosures by those companies profiting from fundraising through digital asset sales.

Contact the DLx team for further information and insights.

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