In October 2021, San Francisco crypto currency exchange Coinbase made waves after releasing a proposed regulatory framework for digital assets entitled Digital Asset Policy Proposal: Safeguarding America’s Financial Leadership (“dApp”). The proposal generated significant discussion during the House Financial Services Committee meeting with blockchain industry leaders on December 8, 2021. It resonated with many key players supportive of industry-friendly legislation. The dApp policy proposal highlighted two significant challenges currently facing the digital asset industry and regulators: (1) the lack of a specialized regulator leaves a void that the various regulators attempt to fill despite questionable jurisdictional authority to cover all issues applicable to digital assets; and (2) the need to establish independent dispute resolution mechanisms allowing for disputes to be resolved more quickly meeting the needs of fast moving blockchain technology. Coinbase’s solution? Establish a new regulatory framework and self-regulatory organization. Congress listened and, after much expectation, the first comprehensive crypto regulation bill has seen the light: the Lummis-Gillibrand Responsible Financial Innovation Act (the “Bill”) introduced on June 7, 2022. The Bill addresses the aforementioned challenges head on, and myriad other topics critical to the nascent blockchain industry. Yet, while the Bill provides much needed clarity in some respects, it leaves some key questions unanswered—giving ammunition to critics. This comprehensive Bill deserves a fighting chance and here is how it can be strengthened.

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