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SALT LAKE CITY — Utah's current senator and a Senate hopeful told a room of cryptocurrency developers on Friday that digital money represents a revolution in financial freedom and personal privacy unlike any since the dot-com boom of 30 years ago.
But, Utah Sen. Mike Lee said, unlike the internet, many in Washington are itching to control the emerging industry through regulation, or take it over entirely, which could spell disaster for the country — stymieing competition, squelching alternatives to the weakening dollar and infringing on Americans' constitutional rights.
"As the U.S. dollar continues to be unstable, continues to be inflated because we effectively print money every time Congress wants to spend more money than it has — which is a lot — and as the world becomes more acclimated to digital transactions, something like crypto needs to exist," Lee told the audience of a few hundred seated at the Salt Palace Convention Center in downtown Salt Lake City.
The very worst outcome, Lee said, is if the Federal Reserve — the nation's central bank — were to create its own centralized digital currency. The second worst outcome, Lee said, is if the federal government regulates private cryptocurrencies, like Bitcoin and Ethereum, "to death." The third worst outcome, Lee said, is if the industry is hobbled by a patchwork of state laws that result in death "by 50 cuts."
"Congress made a very wise choice 30 years ago when it decided, more or less, to leave the internet alone," Lee said. "If people used the internet to commit crimes, they'd go after those crimes. But they didn't set up a central regulatory body to just oversee the internet. We need to take the same approach with regard to the next wave of disruptive technology."
Utah Rep. John Curtis shared the stage with Lee on Friday, the final day of the three-day Permissionless III conference presented by Blockworks and Bankless, two cryptocurrency news communities. Curtis is heavily favored to win November's Senate race to replace Sen. Mitt Romney.
Is Utah the home of crypto?
Curtis spoke about the future of bitcoin mining earlier this week at the conference, which included appearances from U.S. House Majority Whip Tom Emmer, R-Minn.; Commodity Futures Trading Commissioner Caroline Pham; and BlackRock chief investment officer Samara Cohen.
On Friday, Lee and Curtis, who sported a pair of bitcoin socks, responded to questions from Faryar Shirzad, the chief policy officer of Coinbase, a cryptocurrency exchange platform with an extensive government lobbying operation. Shirzad said Stand With Crypto, a nonprofit activist organization supported by Coinbase, gave Lee and Curtis — as well as Utah Reps. Blake Moore, Celeste Maloy and Burgess Owens — an A-rating on their legislative scorecard and called the two lawmakers "crypto champions."
Curtis co-sponsored two bills in the last few months that are viewed favorably by the crypto community. The CBDC Anti-Surveillance State Act, which passed the House, would ban the Federal Reserve bank from issuing a central bank digital dollar. The Financial Innovation and Technology for the 21st Century Act, which also passed the House, would create transparency and other consumer protection requirements for cryptocurrency technologies.
Curtis also supported a bipartisan House resolution condemning regulatory overreach on crypto by the Securities and Exchange Commission. In the Senate, Curtis promised he would represent Utah's 600,000 cryptocurrency owners and said the state is especially well-suited to lead on crypto innovation.
"If you go back to our pioneer heritage, you had to be innovative to survive," Curtis said. "And I've represented the 3rd Congressional District, Silicone Slopes; I think innovation just is in Utah's DNA, and I think that's why it's such a good home for crypto."
Is Congress anti-crypto?
Lee introduced the Saving Privacy Act in September, which would prevent federal agencies from creating databases with personally identifiable financial information of Americans unless Congress passes a law to create such a database. The bill would eliminate the government database that currently tracks all activity in U.S. market and would forbid the creation of a Federal Reserve bank central digital currency.
While Fourth Amendment issues that protect privacy are often bipartisan, Lee said Congress appears to be moving the opposite direction on digital assets.
"There's an emerging breed of politicians, not unfortunately, it exists in both political parties in both chambers of commerce, that thinks that anything that's big and important must be regulated by government or else it's going to pose a threat to humanity," Lee said.
There is currently a willingness to keep cryptocurrency regulations light, Curtis said, adding that could change if it becomes more of a partisan issue.
Lawmakers, particularly on the left, including Massachusetts Sen. Elizabeth Warren, have stressed that cryptocurrency must be heavily regulated to avoid it being used by criminal organizations, to protect consumers from extreme price fluctuations, to ensure digital assets aren't hacked by foreign actors, and to protect the financial system from crashes.
Lee argued that the invasion of privacy has reached unprecedented levels as government and big business collect more data than ever before. Lee said he believes the American people are on the side of developing a more private, more decentralized and more reliable "medium of exchange" as the future looks uncertain.
"Crypto, if we can defend it, if we can protect it, if we can insulate it from excessive federal intrusion, can be that bastion of free market and privacy that we want it and desperately need it to be," Lee said.
