Cynthia Lummis and Crypto Banks

When writing a profile on a sitting US Senator, it is necessary to separate the politics from the opinion.

Anyone that reads a bio on Cynthia Lummis will learn that she was born in the US State of Wyoming, has degrees in Animal Science, Biology, and a Doctorate in Law. She gets an A+ from the NRA every year, and fights for the ‘unborn’ (a new method of describing a pro-life position in the USA). She was pro-Trump, but then again, she was denied Secretary of the Interior during the Trump Administration. Probably because Trump doesn’t like that she worked on the Mitt Romney campaign in 2012. She supports private solutions for Medicare, doesn’t believe climate change is settled science, and opposes same-sex marriage. Textbook far-right US politician, but let’s separate the politics from the opinion. Let’s figure out what Lummis stands for regarding crypto legislation specifically.

Some readers might recognize the state of Wyoming as the home base of Kraken, one of the oldest crypto exchanges (2011). Wyoming is a bit of a Libertarian outlier when it comes to the US State Governments’ Legislative efforts regarding the crypto industry. It is also no accident that Wyoming has both been progressive regarding crypto adoption, and very good at managing their State financial affairs. You could almost describe it as a sleeping crypto giant in the making.

This, along with Wyoming-based Crypto bank Custodia (formerly Avanti) currently suing the Federal Reserve over their Master Account application delays. We might be hearing a hell of a lot more about Wyoming, Cynthia Lummis and Custodia. If Republican potential presidential candidates from Wyoming want to be able to take a serious shot at power, they most definitely want to be well-funded by their friends in the very generous crypto-banking sector.

These days we hear about Cynthia Lummis due to her bill that will hopefully help regulate crypto (Lummis-Gillibrand), that she owns Bitcoin (BTC / USDT), and is apparently known as the ‘Crypto Queen’ on Capitol Hill. Lummis has a rather substantial record working on large State funds such as the Permanent Mineral Trust Fund of Wyoming.

‘The Permanent Wyoming Mineral Trust Fund (PWMTF) is an investment fund owned and managed by the state of Wyoming. The fund was established in 1975 and is the oldest and largest government fund in the state of Wyoming. Funded with severance taxes on natural resources within the state, the PWMTF invests in stocks and bonds. Only the Fund’s earnings—not the principal balance—can be spent. The Permanent Wyoming Mineral Trust Fund had almost $10 billion in assets at the end of March 2022.’ (Investopedia)

Lummis does have a good track record when dealing with large liquidity pools. We will look in regard to the bill text put forth to Congress by herself and Gillibrand(D):

Lummis–Gillibrand Bill (Originally put forth June 7th, 2022)

The Responsible Financial Innovation Act (69 pages)

I have seen the bill, and the text I find most interesting is the definitions at the very beginning of the bill. The US government is defining how they will most likely approach the future regulation of crypto.

Definitions of interest include:

● Digital Asset

● Digital Asset Intermediary

● Distributed Ledger Technology (blockchain)

● Payment Stablecoin (how they write it in the bill)

● Smart Contract

● Source Code Version

● Person Who Provides Digital Asset Services.

There are also the usual suspects like ‘Security’, and ‘Depository Institution’, but these are more just callbacks to Federal Reserve Legislation, and we are not getting into that right now.

Jurisdiction is a large part of the bill as the crypto industry usually prefers the CFTC (Commodity Futures Trading Commission) regulating crypto versus the SEC (Security & Exchanges Commission) run by – as the crypto folks like to call him ‘Goldman Gary’.

The bill has gone through several drafts, so most things that get reported will change at some point. Media of all types will pick up what will draw the most attention, and this tends to range all the way from technical specifics such as definitions of Digital Asset intermediaries, all the way to Stablecoins monitored by existing bank regulations. In the bill, text amendments will allow agency oversight while allowing new players to more easily enter the Stablecoin market (cough cough Custodia).

Taking a quick step back, one of the reasons I enjoy writing about crypto is that we all get to enjoy reimagining monetary policy, and laws that govern the countries we live. Crypto legislation is novel and allows us to reexamine the laws that have governed the United States basically since the Great Depression.

At the beginning of this article, I mentioned separating politics from opinion; just because you disagree with someone’s opinion (Lummis OR Gillibrand), it is more important to examine their actual politics.

Lummis has a lot to gain in Wyoming from being seen as the champion of reasonable crypto legislation. A Bloomberg article wrote that crypto lobbying was the leading spending in this election cycle with a whopping $72.8 million USD outspending ‘Oil and Gas’, ‘Transportation’, and ‘Defense’. Although, you could argue that ‘Defense’ lobbyists should not have to spend much when there is an ongoing global conflict.

<insert Industrial Military Complex Joke>

Lummis has been looking to increase her national and state profile and is most likely hoping to build a large war chest for a future run at increasing her influence and maybe even a future run at President. Access to big crypto spending would be a massive boon for her future campaigns, and she seems savvy enough not to waste the political capital. In her own words below and that of Gillibrand:

‘Since 2018, I’ve watched my home state of Wyoming become the national leader in digital asset regulation, giving innovators regulatory room to experiment while protecting consumers from scammers.’ (Lummis Op-Ed)

‘As of mid-April 2022, 18 percent of American adults reported owning some form of virtual currency.’ (Substack post by Lummis-Gillibrand)

I encourage you to watch the politics, not the opinion. The Republican party is going through a post-Trump transition of economic policy with many valiant attempts at controlling the GOP. Opinion will remain the same on hot-button topics that play to candidates bases. Yet, in the more modern economic fields at play; namely tech monopolies and crypto exchanges, we will see new ground being fought for as the Republican party; renowned for its ability to get out the vote, potentially becoming more interested in crypto. If the Republican party decides that it will further support crypto entrenchment in the US economy, you can be sure that Lummis will be front and center. Global economies might enter a new war on the world currency status quo as the US dollar might start flexing her might with digital global asset settlement worldwide – in $USD of course.

– Bob