Senator Lummis’s effort at comprehensive crypto regulation is picking up momentum, spurred on by increasing bipartisan support, and a greater urgency to act. Sure the promise of decentralized finance, transformative technology, and a whole new world of financial sovereignty is tempting. Let's be honest, that vision is often clouded by something else: the very real potential for financial chaos.

Crypto's Wild West: Consumer Protection Now?

What the crypto space looks like today would make you think it’s the Wild Wild West. Innovation? Absolutely. Opportunity? Potentially. But pervasive frauds, wild market swings, and a pervasive absence of responsibility. We’re hearing talk about the GENIUS Act, or the Lummis-Scott Bill, or the CLARITY Act. These bills would establish a clear legal framework for the definition of digital assets and jurisdictional authority of the CFTC and SEC. All good moves. How many everyday Americans actually understand the intricacies of stablecoins, securities versus commodities, or the implications of overlapping jurisdiction?

The real question is: who's looking out for the average citizen, the mom and pop investor who might be tempted by the promise of quick riches, only to see their savings evaporate in a flash crash? The doddering pair betting their pension on Dogecoin? The single mom who just wants to make a little extra money to pay her monthly expenses on time? These aren’t just hypothetical scenarios, these are real people with real vulnerabilities.

Lummis is wrong, as a principled conservative, to criticize the SEC’s “regulation by enforcement” approach. It’s inefficient, burdensome, reactive and costly. While perpetrators flee with their ill-gotten gains, it’s often the victims who are left to suffer the consequences long after. Proactive regulation is essential.

The crypto faithful like to cry foul, making the case that any effort to bring regulation to the industry is a dramatic overreach and violation of personal freedom. When it comes to freedom from being conned, that argument just doesn’t hold water. The peace of mind that comes from knowing your entire life’s savings won’t be erased by some Wall Street market manipulation scheme? True freedom is more than just the absence of structures and safety nets. It’s about having a level playing field and having the ability to defend yourself.

Freedom vs. Financial Responsibility: Can We Have Both?

Here's an unexpected connection: We regulate food, medicine, and cars for a reason. We won’t let anyone sell contaminated meat or untested drugs. We wouldn’t allow the sale of cars with known defective brakes just because certain consumers would buy them anyway, taking the risk. Why? Because it’s not just about those protections, it’s about the fact that as a society, we’ve agreed to provide those protections for the public interest. And let's be clear: the potential systemic risks of largely unregulated crypto markets pose a threat to the entire financial system.

It boils down to this: is the potential for innovation worth the risk of widespread financial devastation? Are we really prepared to throw the fiscal well-being of everyday Americans under the bus in favor of extreme libertarian ideology?

  • Unregulated Crypto: Prone to scams, volatility, and illicit activities.
  • Regulated Crypto: Offers consumer protection, stability, and responsible innovation.

On this latter point, we thank Sen. She cautions that the U.S. risks letting countries like Singapore and the EU get ahead in terms of providing regulatory clarity on crypto. This isn’t a matter of prestige, this is a matter of economic competitiveness. If the U.S. continues to delay, like innovation and investment will just follow the innovators and investors to friendlier shores.

Global Race: Are We Losing Ground?

Let's not panic. Moving forward with half-baked regulations would be equally harmful as a complete inaction. We all want the same thing—an approach that is thoughtful and deliberate, encourages innovation, protects consumers and financial system stability. And let's not forget the international dimension. Crypto is a global phenomenon, and any regulation will need to be implemented in concert with other countries to stop regulatory arbitrage.

The momentum behind the GENIUS Act, the Lummis-Scott Bill, and even President Trump’s enthusiasm for stablecoin legislation is heartening. Policymakers must resist the urge to score quick political points and instead focus on crafting a regulatory framework that is both effective and sustainable.

The real question isn’t whether we should regulate crypto, but how we do it in a way that makes oversight responsible and effective. The future of our financial system hangs in the balance. It would serve to undermine the financial health of millions of Americans. As the chair of the Senate subcommittee on digital assets, Lummis likely leads the SEC-related sections of the bill. At the same time, the Senate Agriculture Committee prepares to take on commodity-related provisions. Both should remember the faces of those who will undoubtedly face harm as a result of wishy-washy guidance.

The question isn't whether to regulate crypto, but how to regulate it responsibly. The future of our financial system – and the financial well-being of millions of Americans – may depend on it. As Lummis guides the SEC-related sections of the bill as chair of the Senate subcommittee on digital assets, and the Senate Agriculture Committee focuses on commodity-related provisions, they must remember the faces of those who could be hurt by a lack of clear guidance.