Wyomingites have long known Republican Senator Cynthia Lummis as the “crypto queen” for her support of the digital asset sector, but now she’s become crypto queen of the nation. Lummis is set to chair the nation’s very first Digital Asset Subcommittee, appointed to the role by U.S. Senate Banking Chairman Tim Scott, R-South Carolina.
For the occasion, Lummis posted the announcement on Twitter, sporting laser-red eye beams along with the tag line, “Allow me to reintroduce myself,” from popular song lyrics.
The color red has meaning in the crypto sector — blue eyes would have been for Ethereum’s ether coin (ETH), while red is for bitcoin (BTC) — and many of the 48,000 or so viewing Lummis’ post commented about the clear shout-out to bitcoin.
Lummis, now tasked in the Senate with developing a nationwide regulatory framework for digital assets, is wasting no time, and told Cowboy State Daily she has planned an aggressive agenda for her newly minted panel.
“This is going to be a very active subcommittee,” Lummis said. “And we are very geared up for it. We’ve been meeting with these banks. We’ve been meeting with their customers who have been de-banked. So, we’re ready for hearings on the de-banking that occurred during the Biden administration. That whole operation is called Chokepoint 2.0.”
De-banking refers to closing bank accounts of customers that banks have identified as posing regulatory, legal, financial or reputational risk to an institution. Chokepoint 2.0 refers to federal banking regulators pressuring banks to restrict services to certain industries or individuals deemed risky — or in some cases politically unpopular — like the digital asset sector.
A similar effort, dubbed Operation Chokepoint and detailed in a Wall Street Journal article, had targeted legal but politically unpopular businesses, like payday lenders and firearms dealers. That started in 2013 under then-President Barack Obama.
Hearings on Chokepoint 2.0 will start Feb. 5, Lummis said.
“Then we’ll be working on legislation later this year to create a digital asset framework,” Lummis said. “And it will probably be some combination of what passed the U.S. House last year and the Lummis - Gillibrand bill in the Senate.”
A regulatory framework for stable coins and work on the tax code as it relates to digital assets is also on her subcommittee’s agenda.
What About That Strategic Bitcoin Reserve
Lummis will also be working closely with the Trump White House on a strategic bitcoin reserve bill.
A long-time advocate of such a reserve, Lummis had introduced legislation to create a bitcoin reserve late last year — which then languished under then Senate Banking Chairman Sherrod Brown, D-Ohio, who refused to allow a vote on it.
But now, with the Republican Party ascendant, there’s new life to the idea. In fact, President Donald Trump himself has said the United States is going to “do something great with crypto” and, as part of that, has called for a strategic reserve on the campaign trail.
He’s followed that up with supporting executive orders, too. But, as many in the crypto sector have pointed out, what’s done by executive order can be undone by the same. Legislation is harder to undo.
Lummis told Cowboy State Daily the idea behind such a reserve is not to detract from the U.S. dollar so much as to build it up.
“We’re $36 trillion in debt,” she said. “The U.S. dollar is by design losing buying power every single year. It’s an asset that’s being debased, meaning every year, it’s buying power declines.”
The opposite is true of Bitcoin, Lummis said.
“Ever since inception, Bitcoin has been yes, fluctuating in value, but year over year, growing in value.”
Because of its planned scarcity — only 21 million bitcoins will ever be mined — it’s an asset advocates say will continue to grow in value over time.
“It has widespread global adoption now,” she said. “And so, it’s an asset that’s going to be durable. It holds the qualities of gold in a digital form.”
That makes it important to hold some bitcoin in reserves,” Lummis suggested.
“We have gold reserves,” she said. “We have about 5% of the world’s gold in reserve. We have oil reserves, and, in fact, we have other assets in reserve that are not commonly discussed, but it’s time to include bitcoin in our reserves, so we have an asset that’s growing in value, that will undergird the U.S. dollar, so we can keep the U.S. dollar as the world’s reserve currency.”
A Central Bank Digital Currency, on the other hand, is not something either Trump or Lummis support.
“China has a central bank digital currency,” Lummis said. “The digital yuan is used as a means for the Chinese Communist Party to surveil its users. They can tell what Chinese people are spending money on.”
That means the government can punish people who aren’t toeing the party line, Lummis said.
“We’ll have bitcoin,” she said. “Which cannot be used as a means of surveillance. Bitcoin is freedom money, and we want to support things that store value, and bitcoin stores value, and that can be used as a means of exchange. Bitcoin can also be used like a currency that doesn’t allow governments to spy on their users. So that’s why Bitcoin is freedom money and that’s why we neither want nor need a Central Bank Digital Currency.”
A Big Head Start
Lummis said her digital asset framework will pull elements from what Wyoming has already done in this sector.
“It’s important that Wyoming lead and continue to lead when it comes to digital assets,” Lummis said. “And I’ve taken Wyoming’s lead and tried to advance some of the breakthroughs in the law that were originated in the Wyoming legislature to bring them to Washington.”
And Lummis does have something of a huge head start on inserting Wyoming principles into the framework. That’s because she brought several people with her who were involved in developing the Cowboy State’s digital asset laws, during which lawmakers and others involved in writing the law had more than 100 meetings with the Federal Reserve.
“There was already a team we were able to assemble of Wyoming people with expertise in digital assets,” Lummis said. “So, we’ve already been working on that.”
That’s music to the ears of Wyoming lawmakers, who have worked for years on the Cowboy State’s digital asset laws, only to see institutions like Custodia Bank and Kraken Financial run aground on the shoals of the SEC’s regulation by enforcement approach to the sector, which has been used to box them out of the financial sector.
“This is a monumental step for Wyoming and reaffirms our state’s leadership in the digital asset space,” Rep. Daniel Singh, R-Cheyenne, told Cowboy State Daily. “Wyoming has been at the forefront of blockchain innovation, and this appointment will only strengthen our position as a national leader in digital policy and innovation.”
Without that, Singh fears America could give up its leadership in the sector, which would lead to countries like China dictating the rules and standards of the future digital economy.
“That could undermine the principles of transparency, free markets, and individual privacy that the United States stands for,” he said. “Dependence on China for rule making could result in the erosion of our competitive edge, a chilling effect on innovation, and the adoption of frameworks that prioritize control and surveillance over freedom.”
Singh also expressed confidence in Lummis’ ability to fight for the protection of individuals liberty and property rights, as well as personal privacy, in the digital realm.
“These are foundational principles that must guide the development of the digital economy,” he said. “And I know she will be a steadfast advocate for them in her new role.”
Still Fighting For Survival
Fighting for the survival of digital assets is something Custodia Bank CEO Caitlin Long is quite familiar with. Her company is even now embroiled in multi-year battle with the SEC over a digital master account, which is a bank account for banks, and allows access to Federal Reserve services.
She was among those excited about Lummis’ appointment as chair of the Digital Asset Subcommittee.
“The most important thing is that law-abiding companies can continue to exist,” she told Cowboy State Daily. “All of us were fighting a war for survival against powerful interests in Washington, D.C., that were trying literally to kill all of us. The reversal of that alone is exciting, even if the strategic bitcoin reserve doesn’t transpire. Getting guard rails defined for the existence of the law-abiding industry is of critical importance.”
Long said she does expect there will be debate about whether the strategic bitcoin reserve should include other cryptocurrencies besides just bitcoin.
“President Trump has used the phrase digital assets,” she said. “He did not use the phrase bitcoin. So, no one knows exactly what that will mean, but obviously we’ll all be watching that.”
Lummis has been a particular advocate of keeping it specific to Bitcoin.
“We’ll see what goes through the sausage-making process,’ Long said. “If anything.”
Meanwhile, Long said she’s seen a shift among previously anti-crypto figures, all coming around to the industry.
“The big banks last week in Davos, all of the big bank CEOs — Bank of America, Goldman Sachs, JP Morgan — Jamie Dimon (JPMorgan Chase chief executive) didn’t go to Davos but he was interviewed last week — and all of them said they’re coming for this industry, and they’re excited to get in and start trading bitcoin and start investing in bitcoin and start lending against bitcoin.”
That after lobbying hard against Cowboy State businesses that were trying to do some of the same things, Long said.
“Now they can’t wait to get in, and they’re publicly saying it,” Long said. “And some of them are already in. The Fed has been very quiet, but it gave approval to the first big bank, Bank of New York Melon to get into the bitcoin custody business last fall.”
Long said that means the race is on.
“The big New York banks like to use regulatory capture and the traditional incumbent banks like to use regulatory capture to try to hold competitors a bay,” Long said. “And it’s fascinating that now they’re all eager to get in. So, it remains to be seen exactly how this all transpires and whether Wyoming can regain some of our rightful lead, which the Biden administration is responsible for stymying.”
Renée Jean can be reached at renee@cowboystatedaily.com.
