Cynthia Lummis’s Crypto Bill Forges Ahead: Here’s What to Know
Senator Cynthia Lummis co-sponsored a crypto bill that would put the CFTC in charge of cryptocurrency market oversight. Here’s what to know.
June 7 2022, Published 2:16 p.m. ET
Bitcoin-happy Senator Cynthia Lummis (R-Wyo.) presented a bill proposal on Tuesday, June 7 seeking widespread cryptocurrency regulation. Lummis co-sponsored the bill with fellow senator Kirsten Gillibrand (D-N.Y.). The bipartisan effort would place crypto regulation oversight responsibility on the CFTC (Commodity Futures Trading Commission) and leave the SEC on the sidelines.
Here’s where the bill wants crypto regulation to go, plus why some crypto enthusiasts aren't bothered by friendly regulation and appreciate Lummis’s motive.
How Lummis’s crypto bill would shape the market
Cryptocurrency remains a regulatory gray area. Until lawmakers can determine how they want to treat digital assets in the long term, the IRS taxes them as securities. Still, crypto isn't the same as securities, and the SEC knows this.
SEC Chair Gary Gensler once called crypto the “wild west.” In many ways, this is true. It's an untrodden territory still fighting for direction, sometimes at the expense of others. You only have to look as far as the latest crypto fraud case to see this in action.
While many purists oppose all regulation, other crypto enthusiasts welcome regulation that remains friendly to the decentralized nature of crypto. That’s where some of the excitement over Lummis’s bill stems from. The bill proposes that the CFTC regulate the crypto market rather than the SEC. The SEC has been harsh on crypto, continuously slamming down ETFs built on digital assets, making the CFTC oversight proposition a favorable one.
Are cryptocurrency assets commodities or securities?
Gensler has stated that digital assets are more akin to securities than any other type of asset class, but Lummis and Gillibrand disagree. The bipartisan duo stated outright, “Most digital assets are much more similar to commodities than securities.”
Lummis is a crypto investor herself. In 2021, she reported owning between $100,000–$250,000 of Bitcoin (BTC). She disclosed a large purchase in August, but she well exceeded the 45-day reporting deadline for congressional cryptocurrency interests. Lummis has reportedly been involved in Bitcoin since 2013.
Lummis says about her crypto regulation bill, “The United States is the global financial leader, and to ensure the next generation of Americans enjoys greater opportunity, it is critical to integrate digital assets into existing law and to harness the efficiency and transparency of this asset class while addressing risk.”
Some crypto crowd members support Lummis (but it isn't a monolith).
Cryptocurrency is rooted in decentralization. Regulation is rooted in centralization. In that sense, regulated cryptocurrency is an oxymoron. However, many crypto investors and users appreciate the right regulation, as long as it doesn’t interfere with their investments. While crypto fraud statistics vary depending on the source of your information, there’s no denying that fraud does happen, and it isn't infrequent.
Andreessen Horowitz, the head of decentralization Miles Jennings, says about Lummis’s crypto bill, “This is the starting point for discussions about what the law should look like. [...] I think that is one of the reasons we’re excited about it.” However, the crypto community isn't a monolith, and not everyone wants crypto regulation (or the particular brand that Lummis is pushing).
