Crypto banking rule withdrawal by Fed ‘not real progress’ — Senator Lummis

United States Senator Cynthia Lummis suggests the crypto industry may be celebrating too soon over the US Federal Reserve softening its crypto guidance for banks.

“The Fed withdrawing crypto guidance is just noise, not real progress,” Lummissaidin an April 25 X post. Lummis called the Fed’s April 24 announcement — withdrawing its 2022 supervisory letter that haddiscouraged banks from engagingwith crypto and stablecoin activities — “just lip service.”

Lummis is “not fooled”

Lummis, a pro-cryptoadvocate known for introducingthe BitcoinBTC$94,274BitcoinChange (24h)0.80%Market Cap$1.87TVolume (24h)$18.45BView MoreStrategic Reserve Bill in July 2024, pointed out several flaws in the Fed’s announcement, even as Strategy founder Michael Saylor and crypto entrepreneur Anthony Pompliano suggested it was a step forward for banks and crypto.

She arguedthat the Fed continuesto “illegally flout the law on master accounts” and still relies on reputational risk in its bank supervision practices. It comes as the Federal Insurance Deposit Corporation (FDIC) is working on a rule to stop examiners from considering reputational risk when reviewing a bank’s operations, according to a recent Bloombergreport.

Lummis also highlighted the Fed’s policy statement in Section 9(13), which hasn’t been withdrawn, stating that Bitcoin and digital assets are considered “unsafe and unsound.”

She also reiterated many of the same staff behindOperation Chokepoint 2.0are still involved in crypto policy today.

“I will continue to hold the Fed accountable until the digital asset industry gets more than a life jacket, Chair Powell — they need a fair shake,” Lummis said.

Related:If Trump fired Powell, what would happen to crypto?

Custodia Bank founder and CEO Caitlin Long seemed to share a similar view to Lummis.

“THANK YOU for seeing this for what it is,” Longsaid.

However, other crypto executives praised the Fed’s announcement as a positive development for the industry. Saylorsaidin an April 25 X post that the Fed’s move means that “banks are now free to begin supporting Bitcoin.”

Anastasija Plotnikova, co-founder and CEO of blockchain regulatory firm Fideum, said the Fed’s decision “is a significant development, as it will simplify the path to institutional adoption.”

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