The Lummis/Gillibrand Crypto Bill: Is the 'Ancillary Token' Approach the Best Way? - Ep. 361

Lewis Cohen, lead attorney at DLx Law LLC, joins to discuss the recently proposed Lummis-Gillibrand bill, the Responsible Financial Innovation Act, which he helped shape. In this episode, we cover: 

• how Lewis was impressed by Gillibrand’s and Lummis’s offices’ hard work and bipartisanship  
• how the bill creates a new definition for an “ancillary asset” with split oversight responsibilities between the CFTC and the SEC 
• how the bill proposes a test of managerial centralization as a determinant of disclosure requirements for digital assets 
• his response to criticism that the ancillary token approach is more complicated than need be and gives too much power to the SEC 
• why the bill didn't adopt an approach more similar to something like SEC Commissioner Hester Peirce’s token safe harbor proposal 
• how Lewis would respond to SEC Chair Gary Gensler’s contention that the vast majority of digital assets are securities 
• how Cohen is concerned about legislation or regulation impinging on basic freedoms to transact by over-applying securities regulation
• what kind of SEC disclosures will be required for “ancillary assets” and the requirements for projects to be able to cease mandatory disclosure
• how the bill defines stablecoins
• whether the requirement for stablecoins to maintain reserves means the end of algorithmic stablecoins or whether they will just be called something else
• how the bill handles DAOs and how legislation in this area must be delicate
• why Lewis believes the proposal is a “bright spot” for thoughtful US legislation and bipartisanship
• why he doesn’t see the bill being adopted in the current Congress 

Thank you to our sponsors!

• Crypto.com: https://crypto.onelink.me/J9Lg/unconfirmedcardearnfeb2021 
• Ava Labs: https://avax.network  

EPISODE LINKS 

Lewis Cohen 

• DLx Law LLC: https://dlxlaw.com/
• Twitter: https://twitter.com/NYcryptolawyer 
• LinkedIn: https://www.linkedin.com/in/lewis-cohen-a3211410/

Lummis-Gillibrand Proposal (Responsible Financial Innovation Act) 

• Legal Memo from DLXLaw : https://dlxlaw.com/wp-content/uploads/2022/06/DLX_FSV-summary_RFIA_060722.pdf
• Lummis-Gillibrand Section by Section Overview (summary by bill authors): https://www.gillibrand.senate.gov/imo/media/doc/Lummis-Gillibrand%20Section-by-Section%20%5bFinal%5d.pdf
• Responsible Financial Innovation Act (full text): https://www.gillibrand.senate.gov/imo/media/doc/Lummis-Gillibrand%20Responsible%20Financial%20Innovation%20Act%20%5bFinal%5d.pdf
• Blog post intro (by Senator Kirsten Gillibrand) : https://gillibrandny.medium.com/the-responsible-financial-innovation-act-218a764abd6c

Commentary:

• CoinDesk recap: https://www.coindesk.com/policy/2022/06/07/key-us-senators-introduce-bill-outlining-sweeping-plan-for-future-crypto-rules/
• Fortune on what the bill means for algo stablecoins: https://fortune.com/2022/06/08/algorithmic-stablecoins-terra-luna-crypto-regulation-senate-bill-lummis-gillibrand/
• JW Verret's critique: https://twitter.com/JWVerret/status/1534165678831325191?s=20&t=nIWYdZKJzXsr-SVK7F_W9w

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