There is a cryptocurrency angle for Wyoming, but it must follow an economic development strategy that cannot be tainted or influenced by personal interest — and currently Sen. Cynthia Lummis has an undeniable financial conflict of interest.
I don’t think she has an underhanded motive for promoting bitcoin. But it’s not up to each senator or representative to decide whether conflict of interest regulations apply to them. Lummis needs to sell her five bitcoins, which collectively are worth about $200,000.
The laws pertaining to digital currency have a material impact on Lummis’ personal financial situation. Since her swearing in, bitcoin prices have impacted her net worth by $160,000, according to my calculations. It’s difficult for anyone not to have an unintended bias when the stakes are that significant.
This is not nitpicky housekeeping. Members of the U.S. Congress write the tax laws, and tax treatment of cryptocurrency is being actively debated.
Today a tax loophole classifies digital currencies as property, which means that unlike stocks and mutual funds, individuals can bypass the wash sale rules. That means if a person bought bitcoin in May for $50,000, he or she could sell it today for $40,000, immediately buy it right back, but nonetheless take the $10,000 loss on their tax return. It’s a sweet deal — and one that needs fixing. Doing so, however, will impact the attractiveness of Lummis’s own investment.
There is also the issue of whether a bitcoin is categorized as a currency, property or investment. This matters because, for example, if a person buys bitcoin for $30,000, its price increases to $40,000, and the person then uses it to buy a new truck for $40,000, it brings up the question of how the $10,000 gain should be treated as a tax matter. Is that gain taxed as a short- or long-term gain, and can it be deferred?
All of this is more troublesome because Lummis primarily talks about only one of the over 10,000 brands of cryptocurrency. Last month she was one of six headline speakers at the bitcoin2021 conference, and in a recent interview said she is an “advocate for bitcoin.”
To my knowledge, this is the first time in our modern-day Congress that a member actively and openly uses their elected office to advocate for an investment that they own personally.
This is no different than if Lummis owned shares of Disney and went on cable news encouraging Americans to buy shares of Disney.
Bitcoin may be the most popular form of cryptocurrency, but it nonetheless represents less than half of all cryptocurrency volume. Yet in a recent CNBC interview, Lummis mentioned bitcoin 37 times but never any of the digital currency’s competitors. This eventually spurred the reporter to ask her about Ethereum, the second most popular crypto currency. To that the senator responded, “The only one I really understand is bitcoin.”
Finally, Lummis is giving out financial advice without regard to the laws,…
Read more:Sen. Lummis, sell your bitcoin