Loopholes In Draft US Crypto Bill To Kill Most Altcoins? Here’s Why

In what could be a landmark moment in the history of cryptocurrencies, a draft crypto bill will come up on Tuesday. Democrat senator Kirsten Gillibrand and Republican senator Cynthia Lummis have penned the bill.

A Bitcoin bull herself, Lummis’ presence at the core of the bill is expected to heavily favor the Bitcoin ecosystem.  However, all is not well for the future of altcoins.

Chico Crypto, a YouTuber, said the draft of the much anticipated crypto bill will ‘be very interesting’. The bill broadens the definitions of crypto tokens and regulatory scope of the SEC, he said. This could mean that a broad range of altcoins could essentially come under the SEC’s scanner. Also, in a bad sign for the altcoin market, if they are could be considered as securities, he added.

Crypto Bill Could Empower SEC Regulation On Altcoins

Explaining the scope of cryptocurrencies under the SEC, he said,

“The bracket includes tokens that derive profit from others’ managerial efforts or those that provide financial interest in the token’s issuing effort. The decentralized autonomous organizations (DAOs) might not come under this definition. But many people who have interest in the company receive a batch of tokens.”

Most of the altcoins provide interest in the form of tokens. Hence, this could likely be tricky as it expands the SEC’s reach. “There could be loopholes in the bill and could potentially give SEC power to kill many altcoins,” the YouTuber said.

DAOs To Benefit From Bill?

Interestingly, senator Lummis represents Wyoming. It was one of the first states to create a framework for DAOs to register as LLCs. Hence, with a massive pool of taxable money coming to the state, Wyoming will likely witness a big boost in this space.

On the upside, there could be a tax exemption on a certain profit earned through crypto trading. The draft bill will likely exempt capital gains tax of up to $100 in crypto profit if spent on goods or services. A leaked report of an initial draft of the bill, however, proposed to place the exemption limit at $600.