Yahoo Finance

A Senate banking subcommittee held its first hearing exploring what a legislative framework for digital assets should look like that happened yesterday. And that hearing was led by Wyoming Republican Senator Cynthia Lummis. She's a longtime crypto proponent and investor. And I spoke with Senator Lummis earlier today from that Bitcoin investor week conference. First, I got her take on the crypto environment right now, including the recent sell-off we've seen in Bitcoin.

It's not unusual for assets at this point in time after a change in presidency to pull back. It happens with stocks, bonds, oil, uh, and other assets. So, uh, it's very typical in February after a new president takes office for there to be a slump. And so, uh, Bitcoin is participating in that slump. What will surprise me is if in the weeks to come, it does not recover. So I expect to see some recovery certainly in the second quarter of 2025.

I I do want to talk about yesterday's hearing, um, because I'm curious if you agree with former CFTC chair Timothy Massad, his testimony that sort of a legislative overall digital assets framework is less urgent than a stable coin framework. Why would that stable coin, uh, legislation be so urgent and what's the status of it?

We we will be moving stable coin legislation first in the US Senate and then we'll move to market structure. The reason is stable coins are the more plain vanilla asset. Um, so we need to start with something, uh, that is backed by, um, treasuries and agencies and stable coins are 100% hard asset backed by mostly fiat assets. Um, we want to start there because when we move into market structure and later into other, um, opportunities for Bitcoin, uh, we have gotten a win under our belts legislatively.

And what about a a Bitcoin reserve, uh, legislation because in your home state of Wyoming, for example, legislators rejected a state reserve. They were concerned about volatility. How do you sort of control for that if there's to be a federal reserve?

Well, we need to help people understand that short-term volatility is going to happen with Bitcoin. It always has. The goal of a strategic reserve is to buy or convert current assets into Bitcoin and then hold them. So the plan is acquire $200,000 worth of Bitcoin over five years and hold it inviolet for 20 years. That way we can remove the short-term volatility from the equation and look at this as a long-term strategic asset and not something that can be raided, uh, for use in, uh, runaway profligate congressional expenditures, um, and, uh, will be there for the long run, 20 years hence.

And Senator, what kind of feedback are you getting from your colleagues on the hill? Have you seen an increase in support for the idea?

Well, we've got our work to do. Uh, there is uh, a favorable administration. Uh, President Trump has expressed interest in having a strategic Bitcoin stockpile. His administration, uh, is favorable to the notion. Um, we have some work to do both in the US House and the US Senate and helping people understand the reasons why we should have a strategic Bitcoin reserve and how does it interplay with the world reserve currency status of the US dollar? We think they're very complimentary.

Do you think there should be any other types of crypto assets in that reserve?

Well, for my two cents worth, um, I'd like to have Bitcoin be the underlying strategic digital asset. Uh, we know that it can be held safely, uh, in individual wallets or, uh, by, uh, custodians. We know that it doesn't require, uh, a board of directors for verification. We know that it's fully decentralized. We know that it is, um, an asset that will only have 21 million, uh, ever made. So its scarcity will give it value. Some of those, um, criteria for what constitutes digital gold don't exist in other digital assets. So we need to be careful when we have a strategic reserve to be able to check the box in what's important in having a long-term strategic asset. And I think that some of the elements of Bitcoin are a perfect fit for a long-term strategic asset.