Senator Cynthia Lummis has criticized the Federal Reserve’s recent decision to withdraw certain crypto-related supervisory directives as “just noise, not real progress.” In a statement shared on April 25, Lummis dismissed the withdrawals as insufficient and accused the Fed of harming American competitiveness by restricting access to banking services for crypto companies. She specifically called out the Fed’s staff responsible for what she referred to as “Operation Chokepoint 2.0,” a term used to describe efforts to isolate the crypto sector from traditional banking.
The Federal Reserve announced on April 24 that it had rescinded multiple directives regarding banks’ involvement in digital asset activities. These directives included a 2022 supervisory letter that required banks to notify regulators before engaging in crypto activities and a 2023 directive that mandated supervisory non-objection before offering services related to dollar tokens. Moving forward, the central bank will monitor banks under the standard supervisory framework without requiring advance notification.
Despite these changes, Lummis pointed out that the Fed continues to rely on reputation risk assessments in bank supervision, particularly when it comes to activities involving Bitcoin and other cryptocurrencies. She argued that the Fed’s Policy Statement in Section 9(13) deems crypto-related activities as unsafe and unsound, creating regulatory hurdles for banks interested in offering such services.
In contrast, Lummis acknowledged that the OCC and FDIC have taken steps to move away from reputation-based evaluations, leaving the Fed isolated in its approach to crypto regulation. The withdrawals come at a time when there is a more crypto-friendly tone in Washington, with President Donald Trump’s administration signaling support for digital assets.
Senator Lummis reiterated her commitment to legislative oversight of the Federal Reserve’s actions concerning the digital asset sector. She emphasized the need for reforms to ensure that crypto firms have fair access to operate within the US financial system. As a longtime advocate for integrating digital assets into the regulatory framework, Lummis has called for clarification around bank supervision, master account access, and legal definitions related to cryptocurrencies.
Her latest statement highlights the ongoing tensions between federal regulators and lawmakers seeking to normalize crypto within the banking system. As the crypto industry continues to evolve, it remains to be seen how regulatory frameworks will adapt to accommodate these changes.