The Pomp Podcast - #1509 Cynthia Lummis | Bitcoin Senator Reveals US Bitcoin Plan

Episode Date: March 19, 2025

Cynthia Lummis is a U.S. Senator from Wyoming, and is the first-ever chair of the new Senate panel devoted to digital assets. In this conversation we discuss stablecoin regulation, what the bitcoin strategic reserve could look like, what the US should do to embrace crypto, how bitcoiners are working with politicians, and what the bitcoin community can do to help. =======================Are you ready to level up your Bitcoin mining game? Mining Disrupt, the world’s largest Bitcoin mining conference and expo, is happening March 25th to 27th, 2025, in Fort Lauderdale. Network with industry leaders, discover cutting-edge hardware, and gain insights from world-class speakers. Plus, enjoy exclusive events like the Cigar Lounge and Pre-Party Social for meaningful connections. Get your tickets here: https://miningdisrupt.com/=======================BitcoinOS is bringing Bitcoin into a new era. For the first time, Bitcoiners can access real DeFi across the entire crypto ecosystem, powered by revolutionary zero-knowledge technology. No more trusting sketchy bridges or giving up security. BitcoinOS reunites all of crypto around the chain where it all began. Follow BitcoinOS on twitter @BTC_OS and Be early to Bitcoin again.=======================Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/=======================View 10k+ open startup jobs:⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Today's episode is brought to you by Mining Disrupt. They're the world's largest Bitcoin Mining Conference and this year it's happening in Fort Lauderdale, Florida. The dates

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Bitcoin is the first and final BOS of all digital assets and will soon be reborn as the foundation of a united crypto world. follow bitcoin os on twitter at btc underscore os again that's at btc underscore os and be early to bitcoin again so i thought a great place to start our conversation is um you're the big boss now you're you're in charge um let's maybe start with stablecoin regulation which seems to be the first thing that you guys are going to tackle what is the process that you want to follow and then what do you think the outcome will end up being? Well, great to see you. Thank you for inviting me. I'm chairing a new digital assets subcommittee within the Senate Banking Committee.

We're starting with stable coins. We've had a meeting of the subcommittee members just to quietly go through the bill. So often, we don't do that in Congress, which it just seems intuitive that we would do it. But now that we get to lead, the members of my party get to lead, we're doing that. So we met with the members of the subcommittee. We walked everybody through the bill.

We talked about the details. We talked about areas where there's room for negotiation and areas that seem to be pretty well fixed and understood. And then we had a hearing, our first hearing just a couple days ago, to talk both about stable coins and market structure and the importance of both. So when we finally go to mark up in the banking committee, we will start with stable coins. And then we'll move to market structure. Now, I think market structure will take a little bit longer. But, and I'm not sure yet whether the House will move their bill first. As you know, they passed Fit 21 last year when the Senate could not move a market structure bill.

But the Senate and the House are both working their versions of the bill, which are similar enough that we know we're going to be able to dovetail them at the end or start pulling elements that we agree on together before we even start the hearings on the market structure bill. So those two will come first, stable coins and market structure. what is the position of the critics right the people who want to provide friction the people who don't want to see this stuff get passed it feels like specifically with stable coin regulation having clarity having an understanding of the way that the market should work

understanding why these are important it doesn't seem that controversial right the bitcoin strategic reserve and that stuff like it's easy to see why people would be uh kind of against it But stablecoin seems so simple. And so what are you seeing there in terms of the people who are actually opposing some of this work? Yeah, I agree that stablecoins seem to be sort of the plain vanilla asset. But there are critics. Some of them think that we should just let the regulatory agencies regulate this and

not do it statutorily. I strongly disagree because we will see the regulatory agencies whipsaw if they don't have some statutory frameworks to work with. And certainly we saw that in that the Biden administration was not receptive to any digital assets being legislated and in fact had used regulatory agencies to tamp down on digital assets and try to move them offshore. Now, this president comes in. He wants to onshore digital assets. He wants to be the digital asset president. He wants Bitcoin mining in the US. He wants us to be the leader of this industry in the world. So completely different approaches. And President

Trump's regulatory agencies will reflect his goals. We don't want that to whipsaw back once Trump is no longer in office. So we think it's important to have a statutory regulatory structure, both for stable coins and for market structure. The other thing I hear, and it it just amazes me is that stable coins are a lot like a central bank digital currency. And I just don't see it that way. People are worried about stable coins being used as a means of surveillance, just the way the digital yuan is, that's used around the world that China's issued. I don't see them as being that similar. U.S. bank accounts can be used as a means of surveillance. Obviously, Canadian bank accounts were used as a means of surveillance against

the Canadian truckers who were protesting the COVID restrictions to which they were held. The people who contributed to the Canadian truckers had their accounts frozen. I think there was something like 85 or 86 accounts that were frozen for people who had just contributed to the Canadian truckers. Banks can, the federal government can do this now. So I don't see that stable coins provide a means of surveillance that doesn't already exist in the traditional banking system. The CDBCs, I think, are completely unnecessary for the U.S. We don't need a direct-to-retail-facing CBDC because of stable coins in large part. And the central banks themselves, when they exchange fiat currencies among them or use the bank for international settlements to settle transactions among the various central banks in the world, they don't need them either.

Jay Powell has said repeatedly that they can, in a frictionless manner, transmit money among the world's central banks. So there's literally no purpose for a U.S. CDBC. But I don't think we should fear stable coins. Everyone wants to know whether the United States government is going to buy Bitcoin. The Strategic Bitcoin Reserve, you have been at the forefront of pushing this idea. I think you stood up in Nashville and you literally had a proposed bill. What are the odds? What is the process for us to get there?

And ultimately, do you think we will buy Bitcoin? Well, let me start with the fact that we already own Bitcoin. There is Bitcoin in the U.S. asset forfeiture accounts. We're trying to find out how much Bitcoin and whether they are fully surrendered to U.S. custody. We think that could be the basis for the first year's installment of a strategic Bitcoin reserve. We think the United States has held about 200,000 Bitcoin in asset forfeiture. What we don't know is how much of that the Biden administration was selling right before the Trump administration took office.

So we have inquiries to the U.S. Marshal Service. I have talked to Pam Bondi about it. We are trying to find that information out now. On that specifically, Bitcoiners will say, well, just look on the blockchain. You know, it would kind of be the answer. But this is obviously much more complex. Why can't people figure out how many we own? Yeah, great question.

This should be easy to figure out. It should be easy to figure out why a federal agency has two times more credit cards issued than there are employees in the agency. I mean, there's so much failure of just simple accounting and business practices in the federal government that it would shock you. It is inexcusable. So odds that we get the Bitcoin strategic reserve? My bets are that you'll see a state have a Bitcoin strategic reserve

before the federal government. States are incubators of innovation. We're seeing the United Arab Emirates purchase Bitcoin. You're going to look at some of the sovereign wealth funds around the world who are not as tied up in a democratic republic like we are, be able to just make it so. the old Captain Picard statement on Star Trek

where he used to just say, make it so. They can do that in the UAE. Of course, we can't do that here. But there's a possibility that some of these things can be begun without statutory authorization. So we'll see what the White House is thinking about that. And then we'll hope to augment it in a way that provides authority by statute for the U.S. government to take gold certificates, which we hold.

We hold them at about a 1974 value, which was, I don't know, $46 an ounce or some such thing. And then bring them to mark-to-market value and then use that to buy Bitcoin. If we did that, we could probably buy 200,000 Bitcoin every year for five years, hold them for 20 years, and not use a single new taxpayer dollar to do it. So, you know, this is a very doable thing. What we don't have is enough knowledgeable members of the House and Senate to have the comfort level to do this yet. And so that's where you can come in, literally talk to your senators and representatives. Help them understand that Bitcoin is digital gold. And why? Explain to them The scarcity of Bitcoin, the fact that Bitcoin is completely non-controlled by people,

that it is utterly and completely decentralized, that it's infinitely divisible, that it has superior Bitcoin presence, that these are things that can be stored in wallets safely, whether stored for the federal government or by individuals on their own behalf. These are all things that are still questions that are outstanding in a lot of people's minds. So to the extent that sometimes we all,

and I'm guilty of this myself, become a little bit of an echo chamber. You know, I'm always talking to advocates, and I'm an advocate of doing this too. I have to spend more time talking to people who either don't understand it and are open-minded or are opposed, but they don't know why. And there are a lot of those in the U.S. House and U.S. Senate. Now, I think that we're going to get a lot more help from this administration in making this an issue that's important to the President and the White House, because the people who are now at Treasury, who are at the regulatory agencies are both knowledgeable and supportive.

So we have a bigger cast of policy makers that are favorably inclined. We have to deploy them, but please deploy yourselves. Make yourselves advocates of a Bitcoin strategic reserve if you feel strongly like I do. that when it is one of our strategic reserves just like we have an oil strategic reserve how many of you knew we had a strategic cheese reserve raise your hand if you knew that

a few people do okay we have a we have a strategic gold reserve we hold about five percent of the world's gold in physical gold in addition to those gold certificates. So make sure that this is not some out-of-the-box unique reserve, that it can be part and parcel of other commodities that we believe are important for the United States to have as part of our portfolio that is fully diversified, whether it's land in the form of Bureau of Land Management, land, national parks, national forests, and so forth, or whether it's commodities like gold, oil, cheese, Bitcoin. Cheese and Bitcoin. When I watched some of the subcommittee work that you guys were doing,

and one of the things that came out of that was this idea that most digital assets are not securities. They do not kind of fall under the purview of that Howey test. We just saw the SEC come out with guidance that many of the meme coins are not securities. We've also seen the SEC drop a lot of either cases or investigations against crypto companies it feels to a degree like one there's a resetting of the industry relationships but two it does feel like there is uh guidance that maybe as we were seeing kind of you know uh enforcement driving the rules we're now almost seeing the lack of enforcement is creating expanding what people think is going to be possible here talk a little bit about the regulation itself and kind of how you see

this playing out? And where do you think that maybe lawmakers should be involved? And maybe where do you think that you and your colleagues should kind of set it out and let the regulators go ahead and create rules? Okay. Well, I give a lot of credit to Hester Purse at the SEC for involving herself in setting these new policy goals. We want to help her make sure that there's a regulatory framework in statute that does help sort out what is a commodity and what is a security. Now, Senator Kirsten Gillibrand and I have proposed using the Howey test, which has been interpreted by the federal courts of appeals dozens and dozens of time. So there's time. So there's a lot of case law that gives us a roadmap on how to apply

the Howey test to what's a security and what is a commodity. And under that test, yes, most digital assets are probably commodities. You don't have that kind of a relationship between the issuer and the owner of the underlying asset that creates an expectation of a profit or other incidence of ownership. There is not the creation of an investment contract, but we want to make sure those things are embodied in the law. What Senator Gillibrand and I have proposed is something called ancillary assets, for lack of a better term, that would tend to institutionalize in statute, embed in statute, the Howey test. When we see the administration come in, we see the regulation treatment of this industry change,

it feels like that is us putting a flag in the ground and saying anyone in the world that would like to participate in the United States economy, in the U.S. capital markets, and operate in this industry. We're kind of open for business. That is the exact opposite of what we saw for years. And we saw people run all around the world. It does feel like we are a little behind because there are places like the Dubais, the Singapores. They have created sandboxes of testing and innovation. They have created no tax zones. They have really gone out and said, we want to incentivize this industry to come here. What do you think the United States should be doing on that front to maybe play catch up and get these people coming back to the United States

and wanting to build these businesses and these technologies here? President Trump has articulated that as a goal for our country. He wants Bitcoin mining in the U.S. He wants to onshore people who chose to organize a digital asset business overseas because our regulatory framework was hostile. He wants to make this an environment where this industry can thrive. He did a executive order basically overturning staff accounting bulletin 121 at the SEC. He set up a group, a working group within the executive branch to prioritize digital assets. David Sachs is the, they're calling him sort of the crypto czar. He's coordinating with appointed officials who understand this asset class. And so you've got

a treasury secretary who understands it. You've got folks at the SEC, the CFTC, the OCC, the alphabet soup of financial service regulatory entities who understand these issues and are taking a more positive, business-friendly approach. So our, and thank God, you know, it's just wonderful. It's a breath of fresh air. So those of us who are in Congress, which is the more, I mean, they are all, as between the tortoise and the hare, they're the hare, we're the tortoise.

And so as we move more slowly, because lawmaking is that way it's hard it's time consuming it's designed not to allow for knee-jerk advancements in in policy change we're the ones who are coming slow but but we've been planning uh you all have seen the lemus gillibrand financial innovation act for three years. It's been out there for three years. The Bitcoin Act was filed last September in the last Congress so people could see how it works and we could get some good ideas about how to make it better. We're trying to be transparent so we can get good feedback. We don't want people saying, well, you just blindsided me. I need more time on this. This is all going to be very

transparent. And so once again, take pieces of legislation that you know exist. You can look them up on the websites. You can see summaries of them and you can help your legislators understand when you think they're good or not. And if you think there are aspects of this legislation that need improvement, call my office. Chris Land is here and Connor Brown is here. They're back in the corner. And we're happy to help you make improvements. One of the things I heard many times from politicians over the years was, we can't embrace Bitcoin because the people who own Bitcoin will benefit from that. It seems like that changed, though, when all of a sudden the politicians realized that the people who owned Bitcoin may be willing to part with some of their

hard-earned money and provide it to their campaigns. And now all of a sudden there seems to be a very simpatico relationship between politicians and the Bitcoin community. Talk a little bit about just the impact of what really I think maybe is a broader technology story, but definitely showed in the Bitcoin industry where people just didn't participate in politics. They just said, hey, that's not my thing. I want to build my company. I want to focus on what I'm doing. I continue to say it feels like the political apparatus kind of came for them. And so they said, we can either ignore it and continue to get taken advantage of, or we can participate. And that participation had a profound impact in this last election cycle and seems to have really changed a lot

of politicians' minds about what they wanted to do in terms of interfacing with the Bitcoin community? I think you absolutely nailed it. I think that's what happened. You know, Bitcoiners know that this is freedom money, that it's a commodity, that you don't need a regulatory framework, and that you want to have your individual wallets. It's your property. it's none of the government's business and leave us alone. I totally get that. I feel that way too. The government didn't feel that way four years ago. They want to tax Bitcoin miners when it's coming out of the computer and when you sell it, double taxation. They wanted to impose requirements that Bitcoin miners report the energy that they were consuming in order to mine Bitcoin,

even though they would never do that to a cloud computing center that's owned by a major company. Everywhere you looked in the regulatory framework, it was hostile. uh and the hostility was pointed at not just bitcoin but um other digital assets ethereum cordono solano all the stuff but bitcoin was caught up in that and so if you have companies that are custodying multiple assets or lending um using some of these assets of as collateral or whatever, Bitcoin was caught up in it. And the fact that this community started engaging with politicians, and it is a pathetic statement that politicians respond to campaign contributions, and pathetic or not, it's true. And so the fact that this community

engaged in the political process in the last election got people's attention. What else can everyone in this room do in terms of continuing to push this forward? You know, I feel like there's a couple of politicians that are fighting the Bitcoin fight, and I can only imagine the bewildered looks that you have from your colleagues when you start talking about a strategic reserve or you start talking about some of these things. Money is one component. It also feels like there have been moments in time over the last four or five years where the community has rallied together and there's a bill that's going to get passed and they really get loud online. And it seems like that also has an impact.

Are there certain things that you can kind of share with everyone as to how they help you do your job better? Well, certainly your engagement on social media helps a lot. Your engagement with politicians help a lot. Sometimes I mention, as I mentioned, we're an echo chamber. So we think that just because we're all for a Bitcoin strategic reserve that everybody is. And so it was kind of a setback for me when um my beloved chairman of the banking committee tim scott gently said we're starting with stable coins we're going to market structure and we might need to put a pin for a little while in a bitcoin strategic reserve because because we're not there yet in other words Senator Scott is talking with our Senate colleagues who don't want to tell me that

they're not ready to vote for a Bitcoin strategic reserve, but they will tell him that they're not ready. And so it was hard for me to hear that my colleagues, even on my side of the aisle are not ready, but it was one of the most helpful conversations that he could have had with me. So we're now identifying offices on both sides of the aisle, Democrats and Republicans, that we can go sit down and have the conversation with from start to finish. And so that takes time. So I do think we'll probably see some states, certainly the UAE, Wisconsin is already invested in Bitcoin. We have some good modeling out there that people can look at about what a strategic reserve would do over time. People are always

worried about the volatility because they're looking at this on the short term. You know, we were celebrating $100,000 Bitcoin over New Year's, and now it's down around $81,000. There's short-term volatility. We need to acknowledge that and remind people that this is a store of value. This is not a day trading asset. So keep reminding people, This is a buy and hold thing, that there's a reason the term huddle exists. And that's what the point is of a Bitcoin reserve. It's buy and hold it for 20 years. Don't touch it for 20 years.

And then it will be in a position to make a huge financial difference. In the meantime, it'll be growing in value. And it, alongside with some of our other strategic reserves, will help kind of undergird the U.S. dollar as the world reserve currency, or at least validate the fact that we have a diversified asset allocation here in the United States. And it includes gold, and it includes digital gold. I pray every day that you're going to be successful. You're doing a great job. Please keep it up, everyone.

Senator Cynthia Lummis. Thank you. Appreciate you coming. Thank you.