Lummis bristles at the suggestion that Bitcoin’s primary value comes from illicit activity, but that’s an association that’s hard to escape, as she knows. Lummis traveled to Miami last summer for the 2021 Bitcoin Conference, speaking at a congressional panel with Ohio Republican Rep. Warren Davidson, another crypto enthusiast. Miami Mayor Francis X. Suarez gave the keynote address for the two-day conference at $1,499 a ticket, but the highlight was none other than Ross Ulbricht, the founder of Silk Road, a marketplace flea market for illegal drugs and other contraband goods on the dark web. Ulbricht, perhaps better known by his online alias “the Dread Pirate Robert”, was sentenced to life in prison for his role in facilitating online drug transactions using Bitcoin. (He was also charged with soliciting a hitman to kill an associate, but prosecutors dropped the charge.) Conference organizers released a recording of a lengthy phone call he made bragging the virtues of bitcoin.
When asked what it was like to split a bill with a convicted felon, Lummis dodged the question, instead saying Bitcoin is no worse than regular money. “It is easier to hide a crime committed in US dollars than to hide a crime committed in Bitcoin,” she said.
Even if you look beyond scammers and hackers, crypto faces great regulatory challenges. Much of the money invested in crypto goes to upstarts promising to disrupt Wall Street using blockchain technology, falling under a disjointed state and federal regulatory regime that is difficult enough to navigate without the added complications.
This year’s Super Bowl broadcast, so packed with ads touting exchanges like Coinbase and FTX that some have started calling it the “crypto bowl,” may have given the impression that crypto has definitely hit the big time. public. But cryptocurrencies can be pipe dream assets, causing jurisdictional headaches for regulators and developers. A token first sold to fund the development of a new product may look a lot like a stock or bond regulated by the Securities and Exchange Commission, but then it could start to be used more like cash, or at least store credit. Others look like commodities overseen by the Commodity Futures Trading Commission.
While the nascent crypto lobby has been trying to educate an often skeptical Congress for a few years, its first legislative crisis came last summer, when the Senate added tax reporting requirements for crypto businesses shortly before the passage of the bipartisan infrastructure bill. Lummis opposed the requirement and drafted an amendment that got some bipartisan support, but not enough.