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,” Lummis said in an April 25 X post. Lummis called the Fed’s April 24 announcement — withdrawing its 2022 supervisory letter that had discouraged banks from engaging with crypto and stablecoin activities — “just lip service.”

Lummis’ tone was different from the rest of the crypto industry

Lummis, a pro-crypto advocate known for introducing the Bitcoin (BTC) Strategic 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 argued that the Fed continues to “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 Bloomberg report.

Lummis also highlighted the Fed’s policy statement in Section 9(13), which hasn’t been withdrawn, stating that Bitcoin and digital assets are considered “unsafe and unsound.”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 behind Operation Chokepoint 2.0 are still involved in crypto policy today.

“We are NOT fooled. The Fed assassinated companies within the industry and hurt American interests by stifling innovation and shuttering businesses. This fight is far from over.”

“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,” Long said.

However, many crypto executives praised the Fed’s announcement as a positive development for the industry. Saylor said in 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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