Under the legislation, the lawmakers say “ancillary assets” would be commodities. An ancillary asset is an “intangible, fungible asset that is offered, sold, or otherwise provided to a person in connection with the purchase and sale of a security through an arrangement or scheme that constitutes an investment contract,” according to language in the bill. Some exclusions would apply, such as, if someone receives a debt or equity interest with the token they are purchasing, that would then make it a security.
Most digital assets with a higher market cap would be presumed to be a commodity, while those with a lower market cap would be presumed to be securities.
If a digital asset is a commodity, the issuer would have to provide the Securities and Exchange Commission with basic corporate information such as the backgrounds of the board of directors and personnel changes, legal proceedings and risk factors, among other items, on a semi-annual basis. The SEC has not provided feedback on recent versions of the bill.
The bill also outlines requirements for payment stablecoins. Stablecoins are digital tokens whose value is tied to an asset such as the U.S. dollar. The drop in value of some cryptocurrencies in May, including the algorithmic stablecoin Terra, which lost its $1 peg, was followed by dips in other cryptocurrencies including bitcoin and Tether. Treasury Secretary Janet L. Yellen said shortly after Terra’s fall that it underscored the need for legislation to govern stablecoins.
Stablecoins would need to be 100 percent backed by high quality liquid assets and have detailed disclosures on the assets under the Lummis-Gillibrand bill, an effort to protect consumers from risks related to the coins and maintain their value.