The Senate’s “Bitcoin Lady”
And the rest of the week that was.
The 67-year-old Wyomingite Cynthia Lummis gives every appearance of what’s being known in the crypto world, a $2 trillion-dollar industry at this point, as a “Bitcoin maximalist.” Maximalists, the thinking goes, see bitcoin, dreamt up by a mysterious figure named Satoshi Nakamoto back in 2008, as the one true cryptocurrency, the only digital money needed to fix the world’s financial ills. Lummis talks much like a member of that camp. Bitcoin is “freedom money.” The rest of them? To Lummis, Ether is alright, and much of the rest look a lot like scams.
This matters because Cynthia Lummis also happens to, since last January, be Senator Lummis, a member of that chamber’s consequential banking committee and a leading figure in Washington’s scramble to determine how cryptocurrencies should, if at all, slot into the United States’ two-centuries-old establishment economic apparatus. All while she remains little know in the broader world and, frankly, in Washington. “Like ‘hummus’!” reads the helpful footer on the emails her staffers send out.
(Per her office, this can raise a bit of trouble with reporters and others who use the Israeli pronunciation of “hummus,” which leaves her name more like “Loo-mis.”)
I just profiled Lummis and her work on crypto for the California-based tech publication The Information, and you can read that story here.1 The piece digs deep into how Lummis got to know, tracking her through this summer’s infrastructure bill debate, when a provision that aimed to raise $28 billion to pay for that legislation would have increased tax reporting requirements for people who work in crypto — from software developers to miners to wallet-hosters — in ways that critics of the measure said would break the technology and drive it from the United States.
Lummis and a small handful of her colleagues — namely Oregon Democrat Ron Wyden and Pennsylvania Republican Pat Toomey – attempted to change the provision, but they came up short. It’s in the version of the bill signed by President Biden. The whole episode, though, jumpstarted a push that Lummis had been planning: to write sweeping legislation that would govern the integration of cryptocurrencies alongside the dollar, from dictating how the SEC and Commodities Futures Trading Commission will split jurisdiction to upping transparency requirements in the name of consumer protection.
But with that comes a very big question that could shape the future of cryptocurrencies in the United States: is Washington opening the door to virtual money as a technology still in its earliest stages of development or is it instead simply giving its blessing to Bitcoin as the solution to what’s the matter with the old way of doing things?
Lummis’s bill, called the Responsible Financial Innovation Act, is still a work in progress. It started being circulated to industry about eight weeks ago at 167 pages, and Lummis’s office says that they expect to add about 30 pages once the feedback comes in. And her staff stresses that the bill will be evenhanded, giving every cryptocurrency a chance. For one thing, Lummis holds quite a bit of bitcoin — five coins, at last count, which as of right this moment puts her stake at $193,328.50. Lummis is personally pretty wealthy, and that amount of bitcoin isn’t going to make or break her. But “Bitcoin-rich senator boosts Bitcoin!” is too tempting a headline.
Still, with the devil in the details, the legislation that Lummis eventually introduces, and that will, if it gets any traction, morph as other members and staffers get their hands into it, will be closely studied to see whether it picks favorites. How that shakes out may well set the stage for the future of digital money and distributed finance in the United States.
—One other thing that emerged from reporting out this story: The D.C.-branch of the crypto world is dying to figure out where Elizabeth Warren is going to come down. The Massachusetts Democrat has warned of the environmental impact of Bitcoin and other proof-of-work cryptocurrencies. She talks of the “shadowy” figures running things behind the scenes.
Some crypto advocates say they think Warren’s a lost cause; others say that they still have hope, that they can convince her that crypto is a route around the big banks she’s made a career holding in check and a tool for challenging what’s she’s talked about as the monopolization in ‘Big Tech.’ But whether Warren decides that crypto is a tool of financial inclusion or exclusion is one of crypto policy’s biggest and most consequential unknowns.
(“Bitcoin Lady,” huh? It’s what Lummis says her colleague Senator Lindsey Graham calls her.)
Google’s bringing on a former PayPal executive to head its payments branch, a move that looks to include the company dabbling in crypto.
A House subcommittee held a hearing this week on the “energy impacts of blockchains.”
And the Federal Reserve came out late yesterday with a 120-page paper called “Money and Payments: The U.S. Dollar in the Age of Digital Transformation” that considers the possibility of a central bank digital currency, a.k.a. CBDC.
[THIS WEEK IN ANTITRUST]
The FTC and the Department of Justice’s antitrust division are Washington’s two main antitrust enforcers, and like any two government bodies that share jurisdiction, they don’t always get along.
But FTC Chair Lina Khan and DOJ antitrust chief Jonathan Kanter announced this week that their organizations would be working together on reworking the merger guidelines that help companies know whether federal regulators — and the courts — will give their blessing to them buying each other up, etc.
For industry, having the FTC and DOJ antitrust cahooting together is a bit like being a kid with two parents who agree on discipline: there’s not a lot of room to maneuver.
Part of the merger guideline revision will, per a press release, include a look “digital markets” that “have characteristics like zero-price products, multi-sided markets and data aggregation.” In other words, how can the resulting framework cope with companies like Facebook where the chief product is free, something existing guidelines don’t really tackle?
Like with the FTC getting a crack at defining what counts as a modern monopoly in its Facebook case, the guideline review is a chance for this generation of antitrust administrators to redefine the rules to match its vision. Is it a great deal of work with slim odds of ultimate success? Sure! But if you’re an ambitious antitrust enforcer, it’s a great problem to have.
Larry Summers — former treasury secretary, etc. — warns that Khan’s “disturbing” new vision for merger policy might make inflation worse.
Microsoft’s attempt to buy the game maker Activision Blizzard in a deal worth $69 billion might put it back on antitrust-watchers watch list. (Ken Buck, the top-ranking Republican on the House’s antitrust subcommittee, told me this fall that Microsoft isn’t included in his one-person ‘Big Tech’ boycott because it’s a useful alternative to Google et al.)
The Senate Judiciary Committee voted out the American Innovation and Choice Online Act, a bill that would prevent big digital platforms like Apple, Google, and Amazon from “preferencing” their own products and services. (Here’s the text, as introduced.) Getting floor time for it is hardly a done deal, but it’s still a fairly big moment — Democrats and Republicans moving past years of rhetoric to advance a concrete mechanism for addressing what they see as one of the platforms’ biggest problems.
[THIS WEEK IN CUSTOMER SERVICE]
Those who remember the HealthCare.gov fiasco may be surprised that the federal government was able to execute this so quickly, or at all. But we’re a long way from 2013. Not only does the government have the U.S. Digital Service and 18F, the flagship modern tech agencies founded in 2014 to deliver better services to the public, it now has pockets of people with similar capabilities throughout the executive branch.
Worth noting that developers here put aside their pride and simply bolted a new interface on the U.S. Postal Service’s existing platform. Elegant, not so much. But Americans didn’t really care about elegance as much as they cared about getting potentially life-saving tests. That’s one benefit of working with government tech folks working in-house: it’s less about fulfilling a contract than just getting the job done.
As these things go, there were some necessary tweaks, like adjusting for multiple-unit buildings and adding language choices.
The House of Representatives is creating its own digital services team.
(Know more about the building of COVIDtests.gov? I’m curious.)
You might have read Michael Schulman’s profile of “Succession” actor Jeremy Strong — he plays all that is Kendall Roy — in the New Yorker last month.
Schluman was on the “Longform” podcast this week with a look inside the writing and post-writing process of putting together a profile like that. Of particular interest: how you go about crafting that sort of piece all while knowing that the Twitter world will have a strong reaction to what you publish.
The volcanic severing of Tonga’s undersea cable left the country “in digital darkness” and is making aid efforts more challenging.
The “Tech Oversight Project” launches, backed by eBay founder Pierre Omidyar.