Utah Republicans push back against government regulation of crypto

On Friday, Utah’s Republican senator Mike Lee outlined three outcomes that could imperil the nascent cryptocurrency industry: (1) the creation of a central bank digital currency, (2) patchwork regulation by states, and (3) heavy-handed federal regulation.

Speaking at the Permissionless III crypto conference in Salt Lake City, Lee said that the trio of possibilities presented grave risks to the fast-growing digital assets sector. Lee and his fellow Republican congressman John Curtis were particularly critical of federal and state regulation of digital assets, likening it to financial surveillance that could stifle the crypto industry.

“Instead of coming after you, we should be your protectors,” Curtis said about the government’s role.

Lee vociferously defended cryptocurrency’s status as a medium of exchange and criticized its categorization as a security – a major contention of the U.S. Securities and Exchange Commission, which has launched multiple lawsuits against the industry for failing to register cryptocurrency products as securities: “Cryptocurrency is not a security. Cryptocurrency is not a commodity. Cryptocurrency is used as a medium of exchange,” Lee explained. “I don’t even think we should tax the capital gain on the transfer of it,” Lee said.

The speech also denounced central bank digital currencies (CBDCs), which governments around the world are exploring as a way to streamline payment systems and to mitigate volatility and fraud from traditional cryptocurrencies. While China’s CBDC program is already underway, the U.S. Federal Reserve is still assessing the potential and feasibility of a CBDC in a domestic context, with the crypto industry largely viewing it as a threat to financial freedom.