Unchained

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

Jun 10, 2022

Lewis Cohen, lead attorney at DLx Law LLC, shares his insights on the Lummis-Gillibrand Responsible Financial Innovation Act. He highlights the bill's innovative definition of 'ancillary assets' and its unique split oversight between the CFTC and SEC. Cohen tackles criticisms of the ancillary approach and discusses the implications for digital asset regulation, investor protection, and the potential impact on innovation. He also addresses the future of stablecoins and DAOs, underscoring the need for careful legislative balance in this rapidly evolving landscape.

40:49

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Episode guests

Lewis Cohen

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Episode notes

Intro

2min

Navigating the Lummis-Gillibrand Crypto Bill

9min

Exploring Alternative Strategies for Cryptocurrency Regulation

2min

Regulatory Perspectives on Crypto Assets

13min

Regulatory Scrutiny and Ethereum's Merger Progress

4min

Challenges in Centralized Staking and Crypto Security Breaches

5min

Recent Security Breaches and Innovative Blockchain Initiatives

4min

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