Watch: US Senator Cynthia Lummis talks about the 'Crypto Bill'
A US Senator has expressed her conviction that blockchain-based digital assets and the cryptocurrency industry will "be every bit as big as the internet itself".
Cynthia Lummis, a Republican Senator from Wyoming, is one of the architects of a proposed piece of landmark legislation that promises to end the confusion over which cryptocurrencies are commodities and which are securities and create a regulatory framework for all digital assets.
On this week's episode of The Crypto Mile, the Senator discussed the sweeping changes that the bipartisan Responsible Financial Innovation Act will bring to the cryptocurrency industry.
Speaking to Yahoo Finance Lummis said that people in the US want a robust regulatory framework that does not repeat the mistakes made when the internet was in its infancy, regulation was lax and the unethical use of customer data was permitted.
Lummis said: "Because of the lax regulatory approach in the early days of the internet, I think a lot of people would like to have a do-over and not exempt from potential liability the social media giants who are inadequately protective of data privacy, for example.
"Having learned some lessons from when the internet was in its infancy and now seeing digital assets as something that will be every bit as big as the internet itself, we want a situation where we are having a constant dialogue and building a regulatory framework that is both robust and responsive when it comes to privacy protection."
Lummis, alongside US Democrat Senator for New York Kirsten Gillibrand, is the architect of the Responsible Financial Innovation Act, also dubbed 'the Crypto bill'.
She described the bill as being able to have a huge impact on the crypto-industry as it will bring regulatory clarity with regard to which agencies crypto assets will have to comply with, under specific circumstances.
She said: "The bill provides definitions for how those would be categorised.
"For example, bitcoin would almost certainly be a commodity, but certain assets would be viewed as securities, which would require more disclosure for consumer protection purposes."
The Senator from Wyoming then expressed her conviction that blockchain-based technology will be adopted en masse and change the global economic landscape.
"Blockchain-based technology is not only here to stay, but it's here to grow, expand and provide opportunities that you and I can't even imagine today," she added.
The Republican Senator then shed some light on the US Federal Reserve's opinion on US dollar-backed stablecoins and central bank digital currencies, or CBDCs.
Lummis described how the Federal Reserve are more likely to favour a regulated US dollar-backed stablecoin than a direct-to-consumer CBDC.
She said: "I am hopeful and I believe that the Fed agrees that we should not have in the United States a direct-to-consumer CBDC.
"However, the Fed could have a CDBC that is useful in the wholesale market, meaning to move money more quickly and efficiently among banks.
"But the consumer interface with the US dollar would remain through either a digitised dollar or a stablecoin, that is 100% US dollar-backed.
"This just makes sense that moving to a digitised dollar should be part of the transformation of our current system."
"We want to make it faster and cheaper to transfer money among buyers and sellers of goods and services."
This view is supported by the US 'President’s Working Group on Financial Markets Releases Report and Recommendations on Stablecoins' which noted in November 2021 that, "well-designed and appropriately regulated stablecoins could potentially support faster more efficient, and more inclusive payment".
Many nations are experimenting with the use of CBDCs, with China taking the lead amongst the world's larger economies, having made its digital yuan available to
However, Lummis used Beijing's experiment in combining programmable money and mass surveillance with its develops in CBDCs and the nation's social credits system as a warning of what not to do with digital currency technology .
She added: "We need a framework that is not used as a means of surveillance, which we fear is happening with the Chinese Communist Party's digital yuan."
In January of this year, the Federal Reserve issued a discussion paper entitled, 'Money and Payments: The US Dollar in the Age of Digital Transformation'.
The paper stated that there are risks associated with direct-to-consumer central bank digital currencies that bypass the commercial banking sector.
The paper stated: "A CBDC could also pose certain risks and would raise a variety of important policy questions, including how it might affect the financial-sector market structure, the cost and availability of credit, the safety and stability of the financial system, and the efficacy of monetary policy."
Stablecoins are a more recent incarnation of the cryptocurrency ecosystem that peg their value to one or more assets, such as a sovereign currency such as the US dollar or real-world assets.
Stablecoins pegged to the US dollar are predominantly used today to facilitate the trading of digital assets, but many firms are exploring ways to promote stablecoins as a widespread means of payment.