Headline: Who is Senator Lummis and what is she doing to help crypto?
What Exactly is Senator Lummis doing to support crypto?
First, this is NOT a political blog, goodness knows that there are enough of them. But, there seems to be one lawmaker more than most who is both clued in and interested in governing cryptocurrency. Her name is Senator Cynthia Lummis, from Wyoming. (She is often joined by another senator from “across the aisle” Senator Gillibrand.) Together, they are introducing into the Senate, an Act that might help to bring certainty to cryptocurrency issues. I genuinely wish the 2 senators lots of luck, and intestinal fortitude. They already seem to be resolute enough.
I focused upon Senator Lummis because she seems to be the first name on the legislation, and, seems to have other leanings that suggest that cryptocurrency might not be on her short list of recommendations.. In point of fact, she is quoted as having said, “I was skeptical,” said Lummis, R-Wyo. “The notion of having something of value on the internet that I could never get my hands on was foreign to me.”
So, what is her background to place her in this position?
In her time in state level politics, she served for several terms as state Treasurer for Wyoming and on the Agriculture committee. In both of these positions, she had to learn a lot about finance and law, and several different industries.
In 2013, she first became truly aware of (and concerned about) cryptocurrency.
In 2017, she attended a conference on cryptocurrency in Cancun. She was so absorbed by the conversations at the conference, she never made it to the beach.
In 2019 she ran for Senate, and won election for the 2020 term. She also became the first member of the Senate to own cryptocurrency.
In 2021, she attended The Bitcoin Conference in Miami with fellow cryptocurrency-aficionado, Rep. Warren Davidson. At this conference, the main argument against cryptocurrency was that it was easier to commit crimes with it. Senator Lummis replied, “It’s easier to hide a crime committed in U.S. dollars than it is to hide a crime committed in Bitcoin.”
Since then, she has been adding to her staff individuals who bring specific cryptocurrency experience and skills. Earlier this year, she and several other parties filed amicus briefs with the federal courts in defense of Coinbase and BinanceUS. (Think of an amicus brief as a way of saying, hey, these guys might have a point.”) They are being pursued by the SEC, who claim that they fulfill mutually exclusive roles of exchange, and broker with relation to cryptocurrency. Her ground is that cryptocurrency is not an investment contract, and therefore not a security. In her own words, “Although the SEC seeks broad authority over crypto asset markets, most legislative proposals in Congress would instead grant much of that authority to other agencies. Unsatisfied, the SEC seeks to circumvent the political process to commandeer that authority for itself,”
What IS in this bill?
According to Lummis’ office, the draft bill they hope to introduce this spring gives “clear guidance to regulators about which assets belong to different asset classes, protects consumers through strong standards and mechanisms for policing bad actors, regulates stablecoins, and creates a new digital asset self-regulatory organization under the joint jurisdiction of the CFTC and SEC to oversee the digital asset markets.”
This approach seems to have the support of the industry too. Both the Crypto Council for Innovation and the Chamber of Digital Commerce loudly sing her praises, calling her “a visionary,” among other accolades.
Lummis argued that Bitcoin fits in a well-diversified retirement portfolio — it can fluctuate in price day by day, but long term, she sees it going nowhere but up. “I think it makes sense as part of a diversified asset allocation,” she said. “It is the store of value. It’s not the one you want to spend, it’s not the one you want to throw off income. It’s the one that’s going to grow in value
The Verdict
In doing research for this post, I have made 2 observations that I think are worth making:
- All examples I have seen against cryptocurrency compare it to nuclear meltdowns, and that seems disingenuous. Nuclear accidents leach into ground waters and affect people hundreds of miles away. At worst, in a rug pull, the investor loses all of the money they have invested, and then, the financial blood-letting stops.
- All examples I have seen suggest that hyper-inflation is an inherent problem with cryptocurrency, yet nobody in this camp mentions anything about the hard limit of $21,000,000 BTC. This problem has been foreseen, and most cryptocurrencies have features to mitigate this problem.
Finally, it should be said that she believes in the central tenet of decentralized finance: It appears to be way too easy for the central authority to grow outrageously in authority. This is echoed in her words within her amicus brief:
“The SEC’s attempt to shoehorn an entire new class of assets into the existing definition of a ‘security,’ and thereby add to the definition enumerated by Congress, exceeds the SEC’s authority, encroaches on Congress’s lawmaking, and contravenes the separation of powers. The SEC cannot legislate by enforcement.”
REFERENCES
How Cynthia Lummis, a rancher and grandmother, was crowned the Senate’s queen of crypto – Roll Call
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.