As the world waits to see America’s take on cryptocurrency regulation, crypto enthusiasts should keep one thing in mind: The industry can trust Senator Cynthia Lummis. Her proposal with Senator Kirsten Gillibrand, which we’ve all been waiting for action on, is bipartisan in nature.
We’re still awaiting the final details, but things have slowed to a crawl with the November elections around the corner. United States Securities and Exchange Commission Chairman Gary Gensler has moved forward with commentary that suggests the Commodity Futures Trading Commission will take a major role in the oversight of Bitcoin (BTC), which, in and of itself, would require congressional movement.
However, we know a few things that are consequential. In particular, Lummis has said in interviews that she’s welcoming comments from the industry. That dialogue is critically important to get this legislation done correctly.
“We’ve designed [the crypto bill] so it works within the customary framework for managing and regulating traditional assets,” Lummis said. “We’re going to put it out in draft form for discussion purposes, and you can spend 30 days to help us get this bill in as good of a form we possibly can before actually filing it.”
There’s no question that the industry needs greater guidance on how digital assets are to be treated. Digital assets, including cryptocurrencies and stablecoins, deserve better oversight. Investors should be able to depend on them following the same regulatory routine as securities or commodities and be sure of which commission oversees them. Right now, they’re stuck in limbo, which isn’t healthy for the industry.
Some in the industry think that any regulation is, by definition, a bad thing. But in order to truly mainstream, digital assets need to follow a rulebook that everybody can understand. Having Lummis lead this discussion means that we should feel comfortable that we have somebody fighting to find ways to make the industry viable long-term. She has a history that proves that she understands the power of blockchain technology and the benefits of innovation within the fintech sector. And, frankly, the past six months have not boded well for those arguing against regulation of any kind. Not only do we have headlines from disasters like Celsius Network, but there’s also a steady drumbeat of eight- and nine-figure hacks that the industry seems unable to stop.
Since her election to the U.S. Senate, Lummis has taken a steadfast stand for financial privacy, commonsense regulation and enhanced innovation in the financial sector. She fought against privacy overreach in compliance measures of President Joe Biden’s American Families Plan. In one particularly feisty exchange with Treasury Secretary Janet Yellen, Lummis noted that “bank customers are not subjects to the federal government. Banks do not work for the IRS.”
Lummis once proclaimed that “privacy is a way of life” in Wyoming before lamenting that big tech is trampling civil liberties. Yet at the same time, she’s advocated for enhancing the ability of American innovators to compete in a global economy. She was among the first to opine that bringing “legal clarity to the digital asset industry” would increase the country’s ability to compete with China. And it’s worth considering that among major powers, China is far ahead of the U.S. and the European Union in developing, testing and deploying a Central Bank Digital Currency (CBDC). China, as the senator has separately noted, is pushing a digital yuan, in part, to increase control over the country’s financial system through enhanced surveillance opportunities.
If we want to keep pace with China, then we must provide legal clarity to the digital asset industry. While the SEC has a reputation as a black hole for innovators, Gary Gensler recognizes the potential of digital assets. (1/2)
— Senator Cynthia Lummis (@SenLummis) April 14, 2021
While the senator believes that an American CBDC would help strengthen the U.S. dollar for the foreseeable future, Lummis simultaneously called for privacy to be a “cornerstone principle” of any CBDC proposal that is moved forward. Among her most notable positions is that we “cannot allow a CBDC to become a panopticon.”
Taken in totality, Lummis’ positions seem to be in conflict with one another. She fights for new technological innovation in the financial sector, yet she cautions that privacy must be of paramount concern. In fact, the juxtaposition of her ideas on this issue is exactly what makes her the ideal negotiator for fair and balanced legislation on cryptocurrencies. Digital assets are built based on blockchain technologies, which will categorically change how the world conducts its business. Those technologies should be fostered. Innovation is important to our nation’s long-term economic success. However, at the same time, the cryptocurrency industry yearns for greater regulation, particularly as it relates to Anti-Money Laundering laws and Know Your Customer compliance.
It is up to the government to strike a balance that protects the general welfare of the citizenry while simultaneously allowing innovators to do what they do best. Lummis hits all the right notes. Wyoming, and the rest of the world, will benefit from blockchain-based technologies, including digital assets. But we need a leader in the U.S. Senate who will stand up for the rights of the citizenry while ensuring that American technology providers are able to compete on the world stage.
Lummis has struck the correct tone, marrying the pursuit of innovation with the protection of our right to financial privacy. Neither privacy nor innovation is partisan ideas. They aren’t even political. They are simply common sense.
Richard Gardner is the CEO of Modulus, which builds technology for institutions that include NASA, Nasdaq, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Microsoft, Cornell University and the University of Chicago.
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