The Wolf Of All Streets - WHY THIS SENATOR IS A BITCOINER | US SENATOR CYNTHIA LUMMIS

Episode Date: October 14, 2021

Senator Cynthia Lummis is a gift to the crypto community. She bought her first Bitcoin in 2013 and has been a staunch supporter ever since. Senator Lummis now works tirelessly for the advancement of safe and supportive legislation of crypto. In this episode, Senator Lummis details the legislative bill she is writing and shares her thoughts regarding other prominent regulatory figures in the space. Most importantly, she leaves us with hope and optimism surrounding the future of cryptocurrencies and regulation in the United States. -- Arculus: Arculus is the new crypto cold storage wallet that combines the world’s strongest security protocols with an easy-to-manage app. Store, swap, and send your crypto all with a simple tap of your Arculus Key™ card. Order the safer, simpler, smarter crypto cold storage solution today at: https://thewolfofallstreets.link/arculus -- Kava: Kava connects the world's largest cryptocurrencies, ecosystems and financial applications on DeFi’s most trusted, scalable and secure earning platform. Kava lets you mint stablecoins, lend, borrow, earn and swap safely and efficiently across the world’s biggest crypto assets. To learn more visit https://thewolfofallstreets.link/kava --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co ーーー Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members

This podcast is sponsored by Kava and Arculus. Stay tuned for more information about both of them later in this episode. What's up, everybody? I'm Scott Melker, and this is the Wolf of Wall Street's podcast, where twice a week, I talk to your favorite personalities

from the worlds of Bitcoin, finance, trading, art, music, sports, and politics, basically anyone with a good story to tell. Now, the United States has long been envied as a beacon of hope for people around the world and views as the global center of technological innovation and development. Many, including myself, honestly, are concerned that this legacy is at risk due to uninformed politicians and regulators who seem likely to put sweeping laws into place without bothering to do the work on the assets that they're actually

regulating. Luckily, we have some elected officials who are working tirelessly to represent our interests and those of innovators and entrepreneurs who want to continue working in the United States. I have the honor of speaking with one of them today, Senator Cynthia Loves from the great state of Wyoming. Senator, thank you so much for taking the time to speak with me.

It's my pleasure, Scott. I'm familiar with your work and very impressed with the manner in which you educate and inform and lead the thought and dialogue in this area. We need that in Washington. So thanks for letting me be on your program. The honor is absolutely all mine. So one of the major talking points recently, obviously, has been Gary Gensler's comments

on the statuses of cryptocurrencies and his belief that seemingly all of them are securities. Should the framework established in the 1930s apply to new technology and asset classes in 2021? I think that we need to both let the Commodity Futures Trading Commission and the SEC try to work out what they think are the boundaries of their regulatory authority within the digital asset space. But I also think Congress needs to weigh in. So we're working on a bill in my office to provide some definitions that would go into law that would help instruct and inform the regulatory agencies about the parameters of their jurisdiction and authority in this space. Is that one of the largest issues is that we don't

even know whose authority, who has the authority to regulate in the first place? That is a major issue. We know that currently Bitcoin, for example, is a commodity, but it can be bundled in ways that make it perform like a security. So Gary Gensler is certainly on the right track if he's looking at the manner in which crypto assets are bundled and marketed. But in the case of just a pure Hodler, for example, who is an individual buying and holding Bitcoin, that's a commodity type relationship with the owner. So we do need to weigh in as a Congress to help them sort out their authority. Among the things we hear from innovators is they really do want regulatory

parameters, a regulatory sandbox, if you will, that has sideboards that are understood, but that are sufficiently fluid that they can allow for innovation. And we do not want to in any way inhibit innovation through what we do in Washington, either on the regulatory side or on the legislative side. And it's challenging because there are a lot of people, both within the regulator community and certainly in the U.S. Congress, that know nothing about digital assets, literally nothing. So we're trying to educate and inform. We're trying to read the pilot's manual while we're flying the plane. And that certainly came to light during the infrastructure bill, where the IRS, U.S. Treasury, had come up with a definition of broker for digital assets that was a complete non sequitur. They were applying very old world or traditional finance definition of broker

to digital assets. And it was a complete disconnect. Fortunately, we had an opportunity to weigh in on that and attempt to reshape it. And there was a lot of back and forth that we eventually were not successful. The bill was passed by the Senate, went to the House with this inapplicable language in it

with regard to the definition of broker. But the silver lining behind it was it brought together a working group of US senators who are informed and involved and care about this. And I named specifically Senator Ron Wyden, Pat Toomey, Warner Portman, Sinema, and myself all got very much involved in this. The other really exciting thing that happened during all that was my office reached out to the digital asset community and said, hey, this definition is in the bill. You all know, you can see it. It is completely ill-suited for this industry. Call your senators, help inform them and advocate for a better definition.

And the response was overwhelming. Senators were hearing from constituents they didn't even know existed. And some of these were fairly big digital asset businesses around the country. So the benefit was there's a whole new line of communication open between senators and their constituents in the digital asset space. And the awareness was just almost instantaneous. The feedback now among the dialogue that's occurring now among different senators and their constituents is really encouraging. And Scott, I think it's going to make a big difference going forward because now those relationships have been created between this community and their senators. Their senators seem eager to learn. And it broke a logjam. It ended up being a really good experience. If you had told me even six months ago the cryptocurrency would be debated on the floor of the Senate, I would have probably called you crazy.

So in my mind, I view this as the greatest advertisement in the history of Bitcoin, the fact that it happened. Hopefully it will be sensibly resolved. But the very fact that it was being debated at that level and that the crypto community had this fire lit under them with no super PACs and no real political activism to come together and freeze effectively this bill for days was astounding to see. And so I'm hopeful, I hope you are too, that it will be resolved in the House moving forward. Do you think that there's a chance that now that Congress people see the power of this community that they'll take care of this before it's too late? You know, it did make a huge difference. I hope it will be resolved in the House. I think that's going to be a challenge. We may have to use other legislative vehicles to amend that language.

Certainly, if it becomes law, this definition of broker is so broad that people like Bitcoin miners would have to report their customers. Of course, they don't know who their customers are and so we would have to work with the irs and treasury to make sure that within their their rules uh they are narrowing the definition of broker uh so it does not include people like bitcoin miners and software and hardware developers that have no idea who the ultimate customer is. Well, speaking of reporting in the Treasury, Secretary of the Treasury Janet Yellen has supported an IRS proposal to report all transactions over $600. I'm curious what you make of that because it seems a bit extreme.

It's very extreme. And my constituents in Wyoming are apoplectic about it. My fellow Senator John Barrasso and I have heard more about this issue from our constituents than any other issue this year. And it's because six, Janet Yellen's argument is that there's a lot of tax dollars that are going uncoll taxes in huge amounts. So my argument is, look, $600, if you're looking for huge amounts of unpaid taxes, is such a low threshold

that all you're doing is gathering data on everyday Americans that are going to provide you with no useful information about tax cheaters, and that is very invasive of individual privacy. So we've been very active in this discussion. We will continue to point out the unfairness, the fundamental unfairness of this. But if something like

that were to become law, Scott, I think one of the effects will be that people will leave traditional banking. They'll leave their community banks and their credit unions. unions, and if they can find ways to engage in everyday commercial transactions through digital assets, they will do so. And they're doing it not because they have something to hide, but because they just don't want the IRS knowing every single transaction that they make. What concerns me is I see the IRS wanting tens of thousands of auditors. Now, right now, we have a self-reporting system. We're on the honor system to report our income and pay taxes accordingly. I think the IRS really ultimately wants to turn it from a self store of value that is not a fiat issued currency moving forward. And I know that sounds pretty radical, but I don't think so. I don't think so. I think it sounds, I think it sounds, surprise, but I think it sounds rational more than radical. And I think that we're seeing a movement in that direction in general. This is

one example, obviously, of an invasion of privacy now we know that you know they're going to be looking at central bank digital currencies china's already doing it the fed's likely to eventually move to a digital dollar talk about an removal of your privacy when the central bank has full control of monetary policy and can see literally every transaction that you make should americans be concerned about the dollar eventually going digital? You know, I've been weighing the pros and cons. And where I am right now, the jury's still out with me on a central bank digital currency. But lately, I've been leaning more towards assuring that stable coins, which are drawn on commercial banks, are fully backed by US dollars.

So they truly are stable coins that are reflective of the US dollar. If we have that, we may not need a central bank digital currency because central bank digital currencies are actually drawn on the Federal Reserve. I have some, my tin hat goes on a little bit. I get worried about how much government is encroaching into the lives of individuals. And so for me, that is the biggest concern about a central bank digital currency. Now, we know that there is a digital yuan.

It allows the Chinese Communist Party to spy on the transactions of the Chinese. For example, if a Chinese resident were to make a charitable contribution to a religious organization that is held in low regard by the Chinese Communist Party, the Chinese Communist Party can use the digital yuan to turn off their buying power via the digital yuan. So it does give government control over money. Now, if we have a central bank digital currency that's based on the dollar, we want to avoid the heavy hand of government, the all-seeing eye, that is possible in that regard. So among the things, and this is sort of a side issue, but some of my colleagues and I in the Senate have legislation and have written letters to say, don't let our U.S. Olympians transact in the digital yuan during the Winter Olympics. We believe that China wants to roll out the digital yuan during the Winter Olympics in China and give people digital Yuan wallets to use while they're there

and then hopefully take them back home with them. So then the Chinese government can spy on all the athletes that left the Winter Olympics with the digital Yuan. So we want the U.S. Olympic Committee to be aware that that is the potential of the digital yuan and to share that concern with their Olympians. Guys, I'm so excited to tell you about this new crypto cold storage solution called Arculus. Their cold storage technology keeps your crypto keys off the internet and on an Arculus key card. With no cables and no USB connections, it insulates you

from the thousands of hacking attempts that happen online every single day. You can store, swap, and send your crypto all with a simple tap of your Arculus key card. And if someone were to get a hold of your card, it doesn't even matter because they have three-factor authentication, ensuring that the only person with access to your crypto is you. Guys, you can check out Arculus at thewolfofallstreets.link slash Arculus. Secure your assets, secure your future with Arculus. Guys, unless you've been living underneath a rock for the past few months, then you've definitely heard me talk about one of my favorite platforms, which is Kava. Kava connects the world's largest cryptocurrencies, ecosystems, and financial applications Kava connects the world's largest cryptocurrencies, ecosystems, and financial applications on DeFi's most trusted, scalable, and secure earning platform. They have borrow APYs as low as 0% and reward APYs as high as 200%. They let you mint

stable coins, lend, borrow, earn, and swap safely and efficiently across the world's biggest crypto assets with a simple and intuitive user experience and the full confidence of institutional grid security and quality. Guys, if you have not checked out Kava yet, then what are you doing? You can check it out at thewolfofallstreets.link slash Kava. Do it now. I've always viewed a central bank digital currency as somewhat bad for the people, but likely good for Bitcoin, because one of the obvious barriers to mainstream adoption is people's comfortability transacting with digital wallets or using the currencies. It would first give them access to those, teach them how to use them, and then they would realize that their privacy is at risk and probably move to superior assets. Why are you a Bitcoiner? I know that above all, you talked about hodlers and it being a commodity

and privacy. So I think I know where we're going with this. But what first got you into Bitcoin and why are you so passionate about this in the first place? Curiosity got me involved in at first. I bought my first Bitcoin in 2013. It was one of those when you have a little skin in the game, you start learning about something. That first purchase was just more for fun. But then when I left the House of Representatives after eight years, I was invited to go speak at the Satoshi Roundtable. And it was in Mexico. 2017 was sort of a pivotal year for the Bitcoin discussions. And I just happened to be at Satoshi. I wasn't speaking about Bitcoin.

I didn't know enough about it to speak to Bitcoin experts. I was sent there to talk about why is Congress so dysfunctional? That I knew a lot about. And so after I gave my talk, I just sat and listened for two days. And this wonderful guy named Austin Anderson, who's with Kraken, sat next to me, just kind of adopted me, took me under his wing, and was explaining during the discussion why people in the room were taking different positions. There were Bitcoin miners there. Roger Ver was there. The people who keep the algorithms, I don't know what you call them, they were there. And so they're having this big dialogue.

And Austin sat next to me and said, here's what's going on. These are the decisions that are being made. And it was just a fascinating education. Now, OK, full stop there. Now, I'm a person who's very concerned that we're destroying the value of the US dollar by spending too much money. I thought that when're destroying the value of the u.s dollar by spending too much money i thought that when i was a member of the house of representatives i went home for four years now i'm back in the u.s senate i continue to be very concerned that we're

debasing the value of the u.s dollar by spending more money than we take in. And in doing so, every dollar that I save for my retirement is going to be worth a lot less when I ultimately retire. I was looking for something that would keep its value. Bitcoin has kept its value for me. You know, I bought three Bitcoin in 2013, 2014. I paid about $330 for each of those coins. So three coins, $1,000. And now during our discussion today, I know Bitcoin's over $50,000 per coin. I want to buy it, hold it, keep it for when I'm older. I also want to advocate to people who are saving for their future that they do the same thing because the U.S. dollar, now we're what, $28 trillion in debt.

This very week in the U.S. Senate, There's a heated discussion about raising the debt ceiling. We know we're going to raise it. It is legislation that the majority party is proposing now would put the national debt in 10 years at $45 trillion. There's no way with inflation growing, with spending growing, that the US dollar can hold its value. So I was always looking for other stores of value. I believe that Bitcoin is a great store of value.

Personally, those are the things that made me uh an enthusiast and then of course I get elected to Congress and I I have a uh an interest uh in in the subject matter and I began reading more about it. And so when I arrived here, I found out that as little as I know about this, I know way more than other people who are here, including a lot of the regulators. So as I began asking questions for confirmation hearings and meetings with other senators and regulators,

I realized they had no idea what this was, what they knew about it was incorrect. They thought it was always being used for crime and money laundering and it's nefarious and so it has been an interesting area to get involved in. Because there was so much information, that's why Kirsten Sinema and I started the Financial Innovation Caucus because we can see that the underbanked or unbanked would be better served if digital assets innovate. We can see that the cost of financial transactions can be reduced if digital assets are allowed to innovate. We know that regulators are inclined to want to regulate things they don't understand rather than learn about them

first and so we've had an opportunity i think to have some influence in this space we have staffers from somewhere between 10 and 15 senate offices coming together once a month or more on Mondays just to learn from innovators in this space. They learn about security, about how criminal uses of digital assets can be detected, how actually safe they are. People didn't realize that when that pipeline ransom was paid in Bitcoin, that 85% of the Bitcoin was recovered in less than a week. You know, those were things that were not reported in Washington. The fact that Bitcoin was used was reported, but nobody went on and followed up to say, hey, that was recovered because it was traceable. And then we're talking to him about why uh a place like el salvador would make bitcoin uh legal tender how that helps remittances over 20 percent of the in of the income the whole

economy of el salvador's remittances so if you have um a a son who sends his mother in El Salvador, a Bitcoin on her phone, she gets it right away without Western Union fees, without the risk of going and having the criminal cartel steal her money after she walks out of Western Union. It's hugely beneficial to the underbanked, unbanked, underserved, and to people who live in areas that are just unsafe. So the benefits now, I think, are starting to become more apparent. People are listening. They're more aware of how important digital assets can be. And so now there seems to be more of a readiness in Washington to say, okay, this is real. This is legitimate. We want to help regulate in a way that continues to allow innovation. And honestly, just to accomplish that since the 1st of January is pretty incredible. And Scott, your listeners have helped with that. So I and I want to thank the people who heeded our call to action and were willing to reach out to their senators and help them understand what these assets are able to do, why the definition of broker was a disconnect from what really happens in the digital asset world

and then have a continuing relationship with their senators. It's going to make an enormous difference going forward. So if we came here in Washington and the first reaction to our interest in digital assets was what are digital assets? What are you talking about? Why is this anything we should care about? Then we went to the point where there was a lot of misinformation. And now we're getting to the point of awareness, acceptance, and willingness to regulate in a way that allows innovation.

I'm pretty excited about where we are. We're going to have some rough waters and some slip ups. But I think things are heading in the right direction. I'm pretty positive about where we're heading here. It's really great to hear that perspective, because I can tell you, if you're just an average citizen who's watching this system play out, I think it's easy to become very disillusioned. So to know that there really is progress and that this is being worked on, and that there's a willingness to improve this situation, I think is just really inspiring.

So before we're done, what can your average person do besides calling their senators at this point to help along the progress for digital assets in Washington? Well, if you have a really good book, I hand out a book called Layered Money, or I sometimes hand out Saifedean's book, The Bitcoin Standard. Yeah, it's a little more, it's more dense than Layered Money. Layered Money is more of a primer. But if you have a better book, or a book that you think would appeal to a policymaker, send that book either to us or to your favorite policymaker so they can read about it. I have senators come up to me in the cloakroom and say, hey, what would you, I want to learn about this. What would you recommend that I read? And they will listen to you, meaning, Scott, you and your listeners. If you reach out to them and say, this is something you need to

learn about, this is important. So I think that's a great way to begin to discuss. Or, you know, if you're really into it, call their offices and say, hey, I'd like to start a discussion with whoever on your staff is advising you or learning about digital assets. And then have a relationship with that specific person. You don't need specifically to talk to the senator, but staffers are hugely influential on the people they work for. And so the more knowledgeable you can make them, the better it is for this industry. Now, not everybody comes at it with the same way I do. Not everyone is concerned about the U.S. dollar being debased and needing a lifeline, an alternative.

And of course, I see that lifeline coming from digital assets, in my case, specifically Bitcoin. But even people that are just want to see the unbanked or underbanked served in a way that they can avoid big fees, big bank fees, and they can get quick settlement, same day settlement of transactions. Even those are benefits that digital assets have that fiat currencies don't. So whatever the rationale that your policymaker that represents you has, they will benefit from your knowledge and your ability to educate them. So I know that I'm getting to talk, thanks to you, Scott, to the really informed, aware, innovative community out there. And it's got to be a little scary to that community to find out that I'm one of the most knowledgeable policymakers in this area, because you can tell by talking to me, I'm not

all that knowledgeable. You are. But it gives you a sense of the hurdles that you're facing. And so please, if you're all inclined to influence policymakers, believe me, they're going to be interested now because they're beginning to understand that this is something that isn't going away and is truly important. I don't feel like your average person believes that they can influence their senator or congressperson and that they can have that power. So it's really wonderful to hear that that's a possibility and i encourage everyone to do that so where can everybody follow you after this and keep up with progress oh golly um i'm gonna i have staffers here that i'm sorry didn't mean to put you on the spot twitter follow her on twitter um at san lamas s-e-n lamas l-E-N-L-U-M-M-I-S. Yeah. Well, thank you so much for taking the time.

And I know that we ran over, but I really do appreciate it. And I think that everybody's going to get a tremendous amount out of this. And that it's inspiring to know that we all still do have a voice and that there are people working for us at the highest levels of government.

So thank you very much. Thank you, Scott. Have a great day.