Senator Cynthia 'Crypto Queen' Lummis: Lack of Laws Pushing Industry Overseas

When did you start thinking about crypto? Odds are you were later to the party than U.S. Senator Cynthia Lummis, (R-Wyo.) who bought her first bitcoin way back in 2013. “I wish I would have bought a hundred,” she says now. “Instead, I think I bought three.”

Senator Cynthia Lummis (R-WY.) is a speaker at CoinDesk's Consensus festival in April.

This is one reason she’s been dubbed the Senate’s “Crypto Queen.” Another is that last year she worked with Sen. Kirsten Gillibrand (D-N.Y.) to introduce the bipartisan “Responsible Financial Innovation Act,” aimed at creating a regulatory framework for the industry.

Then came the implosion of the FTX exchange, the crash of cryptocurrency prices and the bracing cold of crypto winter. The onslaught of negative news had a real impact. FTX and other failures had a “chilling effect” on Congress’ appetite to draft policy, says Lummis, but she remains confident legislators will get something done in this session of Congress.

Specifically, Lummis plans to unveil a new-and-improved bill (again with Sen. Gillibrand) as early as April, which she describes as both “lighter and meatier.” Whereas the original bill proposed some studies, the new bill will propose more “statutory language.”

The failure of the United States Congress to enact policy is pushing the industry to other countries.

Will it work? Does it have a chance to get signed into law? In an exclusive Zoom interview with CoinDesk, Lummis explains what draws her to cryptocurrency, argues why the industry needs a regulatory framework ASAP and drops some tantalizing clues as to what we can expect from her legislation. How will it handle the trillion-dollar question of what counts as a security or a commodity? Does she think the legislation will pass? We ask the senator, point blank, on a scale from 1 to 10, how likely is it that we’ll see a bill signed into law. (Her answer might surprise you.)

Interview has been condensed and lightly edited for clarity.

What first sparked your interest in bitcoin and crypto?

Senator Cynthia Lummis: Well, I'm a debt and deficit hawk, so having been in the U.S. House [of Representatives] and watching our debt grow, and without adequate attention and concern to it, I was always looking for a way out. Is there an exit ramp? And I started seeing bitcoin as a possible way to resolve the problems we're having with U.S. debt and deficits. Then my new son-in-law helped me buy bitcoin.

I’ve read you first purchased bitcoin in 2013. Is that accurate?

Yeah. I wish I would have bought a hundred; instead, I think I bought three.

And later I went to the Satoshi Roundtable in 2017. I had just left Congress. I was invited to Satoshi to talk about how Congress works, not to talk about bitcoin, because I didn't really know much about it. And I got hooked. It was a year when the Satoshi Roundtable was discussing the forks [from the Bitcoin blockchain], and it was a consequential year in terms of policy discussions.

So there we were in Cancun, and I never went out on the beach. We were in a windowless conference room and I was just learning about this technology and became fascinated by it.

What excites you, specifically, about the technology? Why are you so bullish?

Well, it's permissionless. I don't have to trust other people to hold my money. I think it's a great store of value. The fact that it is mined is a concept that, coming from Wyoming, is very familiar to me. Wyoming is a mining state. We understand the value of things that are stored in the ground. So it was not a big leap for me to appreciate the value of something stored on a blockchain, where I could actually have a node that has the entire ledger on the computer that I can see. So if the whole system goes down but my node is working, the whole system is preserved.

The notion of a store of value matters to me, coming from a state that has minimal assets – gold and trona, and things that can be taken from the ground and converted to dollars. While they’re in the ground there’s still a store of value. That made sense to me because I see bitcoin as a store of value. I also came to appreciate the concept of fast money and slow money, or “low time preference” and “high time preference.” So as a buy-and-hold strategy it makes sense to me. What does not make sense to me is some of the ways that people try and trade it.

Well said. And your eloquence discussing the space is one reason you’ve been called the “Crypto Queen.” What do you think of that moniker? Love it or hate it?

[Laughs.] You know, at first it was kind of embarrassing, but now I accept it as a compliment because I think the people who use that are really genuinely supportive of what we're trying to do – which is create a regulatory framework that is understandable but that won't kill the industry. And what's happening right now is [that] the failure of the United States Congress to enact policy is pushing the industry to other countries. Europe is ahead of us in terms of its regulatory framework. Australia and the U.K. are getting ahead of us. Switzerland is far ahead of us. So we've got some catching up to do.

To that point, what’s the status of the legislation that you introduced last year with Sen. Kirsten Gillibrand?

We're going to reintroduce it in April, probably mid-April. It'll be lighter and meatier. We’re shoring up some of the definitions, for example, that the [Securities and Exchange Commission] wasn't crazy about.

So, we've been working with the SEC staff to see if we could get something more concrete in law, and that should be helpful to the industry as well in terms of determining what is a commodity and what is a security, and not leaving it to the regulators alone to sort of make that determination, [which leads to] having an encounter with them to argue that they've made the wrong determination.

So it's more robust, I would say. [The legislation has] been on a diet and it's been on exercise, so it's meatier and a little shorter, but we also have tried to address some issues that we think are important to address. From the original bill where we were proposing some studies, we're now proposing more statutory language, because even our depth of understanding [has grown], and our feeling [is that] Congress needs to and is ready to weigh in on some of those concepts.

Europe is ahead of us in terms of its regulatory framework.

Can you give an example, Senator?

Well, ours proposed a study on the digital yuan, and the whole notion of central bank digital currency. The Biden administration has put together a working group, it seems, to explore CBDC. Senator Gillibrand and I, I think, are in agreement that a central bank digital currency should not be direct to retail.

That's the purpose of a stablecoin. And so, we're hopeful that our approach will be well understood and make sense to our colleagues. We nearly had a stablecoin bill put together in the last Congress, but we just ran out of time and runway to get it done.

But we do think there's a pretty good understanding within the committees of jurisdiction that a stablecoin should be the direct to retail side of the equation. And if the U.S. has a CDBC, that it just be a means for the U.S. to engage with other central banks around the world.

You’re facing strong headwinds in both polarization in Congress and crypto winter, with all the FTX and doom-and-gloom headlines. Given both of these challenges, how optimistic are you that you can actually pass something?

I remain optimistic. And I couldn't agree more that FTX and some other colossal failures last year had a chilling effect on Congress' appetite to engage in policy regarding cryptocurrency.

What’s the case for optimism?

Simply because Senator Gillibrand and I remain committed to this. We're working with both the chair of the House Financial Services Committee, [Rep. Patrick] McHenry )R-N.C.], as well as French Hill [R-Ark.], who is heading the subcommittee on crypto on the House side. We continue to work every week with our colleagues here, explaining to them what the bill's going to look like when we reintroduce it in April, so they know what's coming. We’re continuing to communicate with industry, communicating on a bipartisan basis. Senator Gillibrand and I are still very committed to this. We want this to happen.

We need to ramp up in the minds of people a sense of urgency. Because this industry is very nimble and can drop anchor anywhere in Europe, [where they] already have a regulatory framework that's getting fleshed out much faster than we are. So the uncertainty is going to cause problems for us, if we want to maintain our position as the world’s financial leader.

I just came from a discussion with a firm that is hiring in the U.K. as opposed to in the U.S., simply because our regulatory framework is not fleshed out.

Thank you, Senator. Last question. If you had to quantify your confidence in passing legislation on a scale of 1 to 10, where 10 is a rock-solid “we’re passing this thing!” and one is “no chance in hell,” what number do you give it?

I'm a 7 for this year and a 10 for the next two years.

Love the optimism. Thank you, Senator, and best of luck.