Sen. Cynthia Lummis (R-Wyo.) joins "First Mover" to discuss the progress on crypto-related legislation in 2024, the aftermath of spot bitcoin ETFs being approved in the U.S. and why the lawmaker thinks a central bank digital currency (CBDC) in America is "unnecessary."
2024 has already been a whirlwind, but we've hardly spoken about crypto regulation. So I'm very excited for this next guest. Please join me in welcoming to the show Wyoming, Senator Cynthia Lemi. Senator right off the top. I got to get your reaction to the news. We just spoke about FTX is expecting to fully repay its users and Celsius expects to pay out $3 billion to creditors. What's your reaction there? Well, it's great news for those who uh put their trust and their investments in EFTX and Celsius uh that the FTX um customers uh will will get their money back. I um I'm, I'm delighted to hear that uh the, the fraud that occurred still needs to be punished. But uh the return of investor funds is great news. We talk about this fraud and we talk about the bankruptcies of last year so often on this show. Do you think enough progress has been made in the United States to truly protect investors from things like this happening again, especially in, in the cryptos sphere? Well, the answer is clearly no because uh Kirsten Gillibrand and I, the Senator from New York uh have uh for now two years, uh put a bill in front of other members of congress that would address the issues, um, that caused FTX and uh Celsius to uh either defraud or fail to pay their uh customers. Consumer protection is necessary in this country. And although FTX, for example, was not an American based company, it certainly had a lot of American based consumers who lost money. Uh So we need uh regulation in the United States uh for these businesses for two reasons, one to protect consumers and the other is so we have uh a clearly established regulatory framework. So the industries that can develop here have rules of the road. Uh What's happening now, Jen is the United States has fallen behind in terms of adopting a well understood regulatory regime and that's leading some companies to locate offshore. Uh that hurts the business environment in the United States. Um And it doesn't allow us our usual role, which is the world's great innovator. Um So uh I hope that Lous Gillibrand can get back on the front burner. Uh Here in Congress, Senator, you and I spoke about that bill in October of last year at coin desk's state of crypto event. Has, has any progress been made or how, what do you anticipate to happen with the bill this year, especially as we gear up for an election later on? Well, we're making progress in the area of stable coins. Uh certainly every day. Uh we continue to negotiate between the House and the Senate Democrats and Republicans. So it's a very bicameral bipartisan negotiation. Uh We've gotten good technical assistance feedback from uh the fed uh on that component of the Lemus Gillibrand bill. So I, I I'm optimistic that we will see stablecoin legislation this year. Um And possibly even in the first half of this calendar year, as you know, Jen, the deeper you get into the calendar year where there's election, the tougher it is to get uh members of congress to concentrate on difficult legislative issues because their eyes are on their re-election uh and keeping their party uh in the majority. So, uh we're trying to move as quickly as we can on that part of the bill. Now, the other thing that has a possibility is the component uh that could come as part of the five year farm bill uh that deals with Bitcoin specifically, uh which is a commodity. Uh The AG committee has jurisdiction over the Commodity Futures Trading Commission. So I hold out hope that there will be an opportunity to uh establish that regulatory framework at the uh commodity futures trading Commission uh that will govern uh commodities uh that come in the form of digital assets. Certainly Bitcoin, uh which is uh by far the largest uh qualifies there. And the of doing that I think is punctuated because we now have 11 approved exchange traded funds. Uh that are functioning uh in the U SI was very pleased that the SEC uh voted to authorize um the availability to consumers of an exchange traded fund uh format for Bitcoin. Uh This allows consumers who don't technically feel comfortable self custody. Uh Bitcoin to gain exposure to Bitcoin through a mechanism. They're very familiar with the exchange traded fund fees are pretty reasonable for uh uh exchange traded funds and uh it, it allows them uh some confidence that uh those Bitcoin are in good hands and that their portfolio's exposure to Bitcoin is in good hands. So, uh we're seeing uh robust interest. Uh We're also seeing the fact that some very mainstream investment firms uh are those that were approved. Uh So when you see an Invesco or a Fidelity or a Black Rock, uh getting into uh the Bitcoin Eft space, it really gives consumers confidence that this is um a more mature asset class now it's ready for prime time, so speak. Uh And the adoption is going well, Senator, I want to come back to the ETF S in just a moment, but I want to dive a little bit more into the Stablecoin discussions that you've been having. Can you give us some more insight? What are some of the sticking points when it comes to stablecoin regulation here in the US? You know, i it's been such a challenge to get um the House and the Senate, the Democrats and the Republicans um on the same page here that I don't want to dive into the details. Uh It's a pretty delicate discussion. Uh And um if I, you know, if I were to say here's the areas of our sticking points, the one thing today and a few days down the road, they're different. Uh So it's a pretty dynamic discussion. Uh And we're not there yet, we're not to the finish line, but uh there really is light at the end of the tunnel. Often when we talk about stablecoins, the topic of CBD CS comes up. Do you think that the United States will see a CBD C anytime in the near future? I sure hope not. Um I am one who believes that uh DB CS are unnecessary in the US. Uh There are already behind the fed's uh pay windows. Um the ability for them to digitally convey uh among central banks, uh digital assets of any kind. So it really is not a tool that would be necessary uh for uh financial interactions between and among central banks around the world. I oppose a direct to consumer um central bank digital currency. I think that in, in that format, uh it is available for as a tool of surveillance. Uh It allows uh central banking too much control. Uh It allows um agencies of the federal government uh to obtain more and more information uh from us consumers than was ever intended uh in our fiat banking industry. So I'm, I'm opposed to uh a central bank digi digital currency, certainly opposed to one that's direct to consumer. Let's get back to those Bitcoin ETF S we had Sec Commissioner Hester Purse on this show and, you know, she seemed a little frustrated that the approval for this ETF took a whole decade, 10 years to come to fruition here. How are you feeling? I know you shared excitement that the ETF S were finally approved, but should this have taken so long? It should not have. Um And it, it really took a lawsuit. Uh Gray scale had to sue in district court. Uh they prevailed, they won that lawsuit. And uh the S ECs response was to the lawsuit in terms of issuing these ETF S. So these um uh requests to the SEC uh to use the ETF format to uh have exposure to Bitcoin took way way too long. Um And for people who don't understand the fundamentals of Bitcoin, which is most people, I think the concern of it having a language language at the SEC was that this asset class was not ready for prime time, it was ready for prime time. Uh But the foot dragging at the SEC might have led some to think or given credence to people who say that um Bitcoin is backed by thin air that is absolutely untrue. So, um I'm just glad that we finally got over that hurdle. I can absolutely understand why Hester Purse who really understands this asset class, uh was frustrated. Uh I'll bet she's pleased that at least the forward movement has begun. We spoke a little bit about Hester Purse's comments and, and perceived frustration over the timeline here. Uh At the same time when we got the approval sec chair, Gary Gensler seemed like he had reluctantly approved this because of the court case. Do you think that Gensler should be replaced as the chair of the SEC? You know, my instinct is that Gensler understands this asset class and I just am speculating that his reticence is more political than it is misalignment of understanding of the fundamentals. So the only way to replace it is to get a new president and of course, I support um having a, a Republican president. Um So, uh we'll just see where, what the public thinks in November and Senator, I have to ask you ahead of that ETF approval. It seemed like there was even more drama at the SEC with a hacked X account. Um I know you have some thoughts there and you're calling for an investigation into what happened. Tell us a little bit more about that. Well, uh well, Senator Ron Wyden of Oregon and I uh we're, we're just concerned that because that hack occurred. Uh There may not be adequate protections at the sec uh of their data such that it is subject to being hacked. Um So our request was to tighten up and make sure that all available tools, uh, to prevent hacks from occurring are in place at the SEC. Um, the information that the SEC protects, um, it can, can move markets in some ways. Uh, and so if, if it's not adequately protected, uh, there are consequences within markets. So we just wanna make sure that, uh, those kinds of hacks are being addressed, uh, that their ability to secure, their data is hardened uh and secure. And I know we got a wrap senator and forgive me for jumping around. I want to come back to that CBD C question. I know you said that you are not a supporter for a central bank digital currency in the United States. But do you think it's inevitable or whether you support it or not that, that the financial system will go towards that? Especially since other uh areas of the world are experimenting with central bank digital currencies right now. Well, because China has uh a banned Bitcoin and B uh released their own digital yuan, which is a central bank, digital currency into this public sphere uh for use by consumers. They have out there a very complete means of surveillance. Uh And I think we'll find because of its use uh that it is just that it's a means of surveillance and that allowing governments to surveil the manner in which you spend your money uh is dangerous. Uh And so while the digital yuan is out there. I hope the United States will stand down uh and look at what's happening with the digital yuan and not head in that direction of a direct to consumer central bank, digital currency. Ok, Senator, we're going to have to leave it there. Thanks so much for joining the show this morning. It is always a pleasure chatting with you. My pleasure, Jen. Great to see you. That was Wyoming, Senator Cynthia Lamis.