The United States has been the global financial leader since World War II when the U.S. dollar became the world reserve currency. Consequently, Americans have enjoyed benefits like greater buying power, easier access to capital and low-interest rates — including on our national debt.

Unfortunately, we face a growing threat to that dominance, from our national debt on the one hand to China’s ascendance and its own digital currency on the other. If the U.S. dollar loses its position as the world’s reserve currency, it will mean higher U.S. interest payments, more expensive debt repayments and a skyrocketing deficit.

The best time to address a crisis is before it begins, and the United States still has the opportunity to right our fiscal ship and set ourselves on course for continued financial leadership.

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I believe digital assets are the place to start. Decentralized digital assets, like Bitcoin (BTC), offer users a way to invest in a store of value that governments cannot inflate away. The ledger technology undergirding it, called blockchain, has many incredible applications, from currency to tracking shipping and enabling smart contracts.

Since 2018, I’ve watched my home state of Wyoming become the national leader in digital asset regulation, giving innovators regulatory room to experiment while protecting consumers from scammers.

As a former state treasurer, I am excited by the possibilities of incorporating digital assets into the American financial system. I’ve been encouraged to see almost universal agreement from regulators, politicians and the digital asset industry that it’s time to bring digital assets into the regulatory perimeter. After last summer’s digital asset debate during consideration of the infrastructure bill, I believe it’s time to have a holistic conversation about how we want to bring in digital assets.

I partnered with Senator Kirsten Gillibrand to introduce the Responsible Financial Innovation Act as an opening salvo in our federal discussion about digital assets. It’s a holistic way to retain American financial leadership while safely incorporating innovation into our financial system.

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As I see it, a handful of key things must be addressed to accomplish this goal. If we can come together to address these issues, we ca give American innovators the regulatory certainty they need to keep driving our financial revolution while also protecting consumers from bad actors.

It starts with definitions. We set out generally applicable definitions for the digital asset industry and for regulators to understand and use. Before the introduction of the Lummis-Gillibrand Digital Asset Framework, these definitions did not exist in federal law. Innovators will know which laws they must follow, and regulators will have the guidance to treat different assets appropriately.

Clear definitions would remove unnecessary restrictions and nonsensical regulations, like those blocking people from investing in Bitcoin and other digital assets for their retirement or those requiring digital asset miners and others from being forced to provide the Internal Revenue Service with user information it doesn’t have.

It is the duty of Congress to give authority to federal agencies. The Lummis-Gillibrand Digital Asset Framework allows the Securities and Exchange Commission to decide when a digital asset is a security like a stock or a commodity like gold. Meanwhile, the Commodity Futures Trading Commission will be allowed to regulate the spot market.

But this isn’t just about innovators. Congress must protect consumers, and Lummis-Gillibrand does just that. We must require innovators to provide potential customers with the information they need to make sound investment decisions. We must also give regulators the ability to punish scammers. Our plan protects consumers without stifling innovation.

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We also recognize that discussions of stablecoins and central bank digital currencies are ongoing. The Responsible Financial Innovation Act does not provide for a central bank digital currency but addresses the issue of stablecoins. Banks should be able to issue stablecoins, and Congress must follow Wyoming’s example and require that these be 100% reserved. This policy works in the Cowboy State, and we should bring that protection to the federal level.

The Lummis-Gillibrand Digital Asset Framework would do all of these things. While we are only at the beginning of our congressional conversation about digital assets, I believe our bill will provide Congress with an appropriate next step as we move from theoretical to actual digital asset legislation. Ultimately, we must act. Doing so will help cement American financial leadership for years to come.

Sen. Cynthia Lummis is a Republican first elected to the United States Senate from Wyoming in 2020. She served previously as its U.S. representative from 2009–2017 and as its state treasurer from 1999–2007.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.