Senator Lummis Critiques Fed’s Crypto Guidance Withdrawal as ‘Not Real Progress’
In a recent development regarding the regulatory landscape for cryptocurrencies in the United States, Senator Cynthia Lummis has expressed skepticism over the Federal Reserve’s decision to soften its guidance on crypto activities for banks. This announcement, made on April 24, involved the Fed withdrawing a supervisory letter from 2022 that previously dissuaded banks from engaging with cryptocurrency and stablecoin sectors. Lummis described this move as more of a superficial gesture than a substantial step forward for the industry.
‘Noise, Not Real Progress’
In a post on social media platform X (formerly Twitter) on April 25, Lummis articulated her concerns, stating, "The Fed withdrawing crypto guidance is just noise, not real progress.” She characterized the Fed’s announcement as “lip service,” suggesting that it does not address the underlying issues facing the cryptocurrency space.
As a prominent pro-crypto advocate, Lummis is well-known for her efforts to champion legislation such as the Bitcoin Strategic Reserve Bill, introduced in July 2024. Despite the Fed’s decision being met with praise by some in the crypto community, including notable figures like Michael Saylor, the founder of Strategy, and entrepreneur Anthony Pompliano, Lummis remains unconvinced of its implications.
Ongoing Regulatory Concerns
Lummis pointed to several persistent issues in the regulatory framework established by the Federal Reserve, stating the organization continues to "illegally flout the law on master accounts.” She also criticized the Fed’s reliance on reputational risk when supervising banks, which could hinder the crypto industry’s growth.
This critique comes amid news that the Federal Deposit Insurance Corporation (FDIC) is developing a rule aimed at ensuring examiners do not consider reputational risk when reviewing bank operations. Lummis emphasized that despite the Fed’s withdrawal of certain guidance, the existing policy in Section 9(13) that categorizes Bitcoin and other digital assets as "unsafe and unsound" remains unchanged.
A Call for Accountability
Lummis firmly declared that stakeholders in the digital asset industry are “not fooled” by the Fed’s recent actions. She accused the Federal Reserve of having detrimental effects on companies within the industry, further questioning their commitment to innovation and the American economy. "The Fed assassinated companies within the industry and hurt American interests by stifling innovation and shuttering businesses," she stated. Lummis insisted that the struggle for equitable treatment of digital assets is ongoing and expressed her determination to hold the Fed accountable, urging Federal Reserve Chair Jerome Powell to provide the industry with a fair opportunity.
In response to Lummis’s statements, Caitlin Long, founder and CEO of Custodia Bank, echoed her sentiments, affirming that the public should recognize the Fed’s actions for what they are.
Division in the Crypto Community
Despite Lummis’s critiques, other cryptocurrency leaders expressed positivity regarding the Federal Reserve’s updated stance. Michael Saylor remarked that the Fed’s decision indicated a pathway for banks to start offering support for Bitcoin. Additionally, Anastasija Plotnikova, co-founder and CEO of blockchain regulatory firm Fideum, labeled the Fed’s action as a “significant development,” suggesting that it could lead to simpler conditions for institutional adoption of cryptocurrencies.
As the debate continues, it remains clear that the U.S. cryptocurrency regulatory landscape is in a state of flux, with varying opinions on the implications of the Fed’s recent actions. The conversations around regulation and the future of cryptocurrency are likely to persist as stakeholders navigate the evolving environment.
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