On July 13, Justin Slaughter, policy director at research firm Paradigm and a former SEC senior advisor, shared his insights on the future prospects of the Lummis-Gillibrand Responsible Financial Innovation Act bill. Slaughter expressed skepticism about its chances of passing the U.S. Congress, citing a key reason: the absence of Senate committee leadership from its sponsors.
The bill, sponsored by Senators Cynthia Lummis and Kirsten Gillibrand, aims to bring regulatory clarity to the rapidly evolving crypto industry by granting oversight functions of crypto exchanges to the Commodity Futures Trading Commission (CFTC). Despite being initially launched last year without much support, the bill was reintroduced on July 12.
Slaughter explained the potential reasons for the bill’s failure, emphasizing the significance of the chairman and ranking members’ support in each Committee for a bill to progress. According to him, the Lummis-Gillibrand bill faces substantial opposition, particularly from Senator Sherrod Brown, the chairman of the Senate Banking Committee, who has shown indifference towards it. Moreover, other Democrats on the Banking Committee have not shown strong support for the bill’s cause.
The former SEC senior advisor highlighted that even if the bill manages to secure sufficient committee support, it might never receive a Senate hearing due to Senator Brown’s opposition. Committee chairs possess the power to prevent bills they oppose from reaching the Congress floor. While the Lummis-Gillibrand bill may face hurdles, Slaughter believes it can still shape crypto legislation indirectly. Certain crucial elements of the bill could be incorporated into another legislative proposal known as the McHenry-Thompson Bill.
The McHenry-Thompson bill, proposed by ranking members of the House Financial Services Committee, aims to clarify the regulatory roles of the SEC and CFTC in the cryptocurrency industry. Slaughter noted that the McHenry-Thompson bill is scheduled for Markup later this month, during which Congress members can propose various amendments.
Slaughter identified approximately ten aspects of the Lummis-Gillibrand bill that he believes should be included in the McHenry-Thompson bill. These include defining smart contracts, implementing mandatory proof of reserves, requiring CEO attestation, addressing CFTC funding, establishing criminal penalties for crypto asset crimes, and other significant provisions.