Senator Cynthia ‘Crypto Queen’ Lummis is planning a new cryptocurrency bill

When did you first start thinking about crypto? Chances are you were later to the party than Sen. Cynthia Lummis, Republican of Wyoming, who bought her first bitcoin way back in 2013. “I wish I’d bought a hundred,” she says now. “Instead, I think I bought three.”

This is one reason why she has been called the Senate’s “Crypto Queen.” Another is that last year she worked with Senator Kirsten Gillibrand, Democrat of New York, to introduce the bipartisan “Responsible Financial Innovation Act,” aimed at creating a regulatory framework for the industry.

Then came the implosion of FTX, the crash of cryptocurrency prices and the dawning cold of crypto winter. The onslaught of negative news had a real impact. The FTX and other failures had a “chilling effect” on Congress’s appetite for policymaking, Lummis says, but she remains confident they will get something done.

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.” While the original bill proposed some studies, the new bill would propose more “statutory language.”

Will it work? Does it have a chance of being 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 hints about what we can expect from the legislation. How will they handle the trillion dollar question of what counts as a security or a commodity? Does she think the legislation will be passed? We ask the senator, on a scale of 1-10, how likely it is that we will see a bill signed into law. (Her answer may surprise you.)

The interview has been condensed and lightly edited for clarity.

What first piqued your interest in bitcoin and crypto?

Senator Cynthia Lummis: Well, I’m a debt and deficit hawk, so having been in the United States House and seeing our debt grow, and without adequate attention and concern for it, I was always looking for a way out. Is there an exit ramp? And I started to see bitcoin as a possible way to solve the problems we have with America’s debt and deficit. Then my new son-in-law helped me buy bitcoin.

I read that you first bought bitcoin in 2013. Is that accurate?

Yes. I wish I had bought a hundred; instead I think I bought three.

And later I went to the Satoshi Roundtable in 2017. I had just left the 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 was hooked. It was a year when the Satoshi Roundtable discussed the forks, and it was a following year in terms of policy discussions.

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

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

Well, it’s permissionless. I don’t need to rely on others to hold my money. I think it’s a great value store. 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 stored in the ground. So it wasn’t 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 works, the whole system is preserved.

The notion of a store of value is important to me, coming from a state that has minimal assets – gold and thrones and things that can be taken off the ground and converted into dollars. While they are in the ground, there is still a store of value. It made sense to me because I see Bitcoin as a store of value. I also began 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 doesn’t make sense to me are some of the ways people are trying to change it.

Well said. And your eloquence in discussing the space is one reason why you’ve been dubbed the “crypto queen.” What do you think of that moniker? Love it or hate it?

[Laughs.] You know, at first it was a bit embarrassing, but now I take it as a compliment because I think people who use it really support what we’re trying to do – which is to create a regulatory framework that’s understandable, but it won’t kill the industry. And what is happening right now is [that] The inability of the US Congress to enact policy pushes the industry to other countries. Europe is ahead of us in terms of regulations. Australia and Great Britain are ahead of us. Switzerland is way ahead of us. So we have some catching up to do.

To that point, what is the status of the legislation that you introduced last year with Senator Kirsten Gillibrand?

We will reintroduce it in April, probably mid-April. It becomes lighter and meatier. We support some of the definitions, for example, which the SEC was not crazy about.

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

So it is more robust, I would say. It’s been on a diet, and it’s been on exercise, so it’s fuller and a little shorter, but we’ve also tried to address some issues that we think are important to address. From the original bill where we proposed some studies , we now propose more statutory language, because even our depth of understanding [has grown]and our feeling [is that] Congress must and is ready to weigh in on some of these concepts.

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 task force, it seems, to explore CBDC. Senator Gillibrand and I think I agree that a digital central bank currency should not be direct to retail.

That is the purpose of a stablecoin. Therefore, we hope that our approach is well understood and makes sense to our colleagues. We had almost put together a stablecoin bill in the last Congress, but we just ran out of time and runway to get it done.

But we think there’s a pretty good understanding in the jurisdictional committees that a stablecoin should be the direct to retail side of the equation. And if the US has a CDBC, it’s just a means for the US to engage with other central banks around the world.

You face strong headwinds in both polarization in Congress and crypto winters, with all the FTX and doom 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’s appetite to engage in cryptocurrency policy.

What is the case for optimism?

Simply because Senator Gillibrand and I remain committed to this. We are working with both the chair of the House Financial Services Committee, [Patrick] McHenry, as well as French Hill, who chairs the House Crypto Subcommittee. We continue to work every week with our colleagues here, explaining to them what the bill will look like when we reintroduce it in April, so they know what’s coming. We continue to communicate with industry, and communicate on a bipartisan basis. Senator Gillibrand and I remain very committed to this. We want this to happen.

We need to increase the sense of urgency in people’s minds. Because this industry is very nimble and can drop anchor anywhere in Europe, [where they] already have a set of regulations that are being drawn up much faster than we do. So the uncertainty is going to create problems for us, if we want to maintain our position as the world’s financial leader.

I just came from a discussion with a company that hires in the UK as opposed to the US, simply because our regulations are not fleshed out.

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

I’m a seven for this year and a ten for the next two years.

Love the optimism. Thank you, Senator, and good luck.