Key ally in crypto legislation, Senator Lummis, announces retirement

Wyoming Senator Cynthia Lummis suddenly announced on December 19 that she will not seek re-election. This legislator, known as the staunchest supporter of cryptocurrency on Capitol Hill, exits, casting a shadow over the future of crypto regulation in the U.S. Lummis had led the push for market structure legislation and co-sponsored with Senator Gillibrand to establish a clear framework for classifying crypto assets. Her departure coincides with the Clarity Act set to enter the Senate marking phase in January, making the timing quite sensitive.

Lummis's retirement has a profound impact on the industry. She was not only a legislative advocate but also held a significant amount of Bitcoin and publicly disclosed her holdings, fighting for reasonable regulatory space for crypto businesses in the Senate Banking and Agriculture Committees. Her departure means the industry loses an insider who understands the technical details and is willing to engage with the SEC and CFTC. Although White House crypto advisor David Sacks confirmed that the Clarity Act will move forward in January, the lack of coordination from a senator like Lummis may increase the difficulty of passing the bill, especially as there are still disputes over DeFi regulatory provisions that require someone to leave room for innovation in closed-door meetings.

Market response has been relatively restrained; BTC has not experienced panic selling as a result. Instead, it has shown resilience in the wake of the Bank of Japan's 0.75% interest rate hike. This indicates that investors believe the overall direction of crypto regulation is set and that individual changes among senators will not reverse the trend. The Trump administration has clearly expressed support for the industry’s development, and the upcoming change in SEC leadership, with Gensler's departure being more significant than Lummis's retirement, warrants attention. Focus should be on the Senate's stance on the Clarity Act in January. If it smoothly passes the marking phase, the market will welcome a new round of increases. If delays occur, vigilance is needed as short-term volatility may intensify.