Senator Cynthia Lummis swears to hold the Fed accountable until crypto gets more than a ‘life jacket’

Senator Cynthia Lummis, the SBR evangelist, has said that she will continue to hold the Fed accountable until crypto is fully supported. This is in relation to the Fed’s withdrawal of crypto rules for banks, which has ended “Chokepoint” practices.

According to reports, Lummis said that she will “continue to hold the Fed accountable until the digital asset industry gets more than a life jacket.”

Lummis and the Fed – A relationship that won’t work

Lummis was in the first line of exposing the Federal Reserve’s involvement in the crypto industry’s debanking under former President Joe Biden. The Fed had internal guidelines instructing staff to handle “controversial” clients, including crypto companies, with extreme caution at the time. 

Many leaders in the crypto industry said they and their companies were turned down for traditional banking services just because they were involved with the crypto industry. Since he took office again, Trump has made it a top goal to end this alleged bias against crypto banking, which he called “Operation Chokepoint 2.0.”

It was so bad that Nathan McCauley, CEO of Anchorage Digital Bank—the only crypto bank with a national charter said, “I was speaking to a room of about 100 crypto founders in San Francisco. I asked them to raise their hands if they’d had trouble getting or keeping a bank account. Every single hand went up.”

Luckily, her hard work has borne fruit for the crypto industry. On Thursday, the Fed announced that member banks will no longer have to provide advance notice of crypto and stablecoin-related projects. Instead, the Fed will watch how banks interact with digital assets as it does with any other activity.

”The Board is rescinding its 2022 supervisory letter establishing an expectation that state member banks provide advance notification of planned or current crypto-asset activities,” the Board of Governors of the Federal Reserve said.

Rule change doesn’t give crypto-focused banks access to ‘master accounts’

For an institution to be able to use the Federal Reserve System’s payment methods and settle transactions in central bank money, it needs to have a master account at a Federal Reserve Bank. 

However, although the Fed has become more friendly, the rules change doesn’t give crypto-focused banks access to master accounts. Those master accounts are a must-have for any crypto bank to serve customers nationwide meaningfully. 

For years, the Fed has refused to give these kinds of accounts to crypto-focused banks like Kraken Financial and Custodia.

The abolition of the chokepoint is the first step towards the goal of freedom for the crypto entity. Despite the worry in the crypto community that the Fed would refuse to make this change because of Powell’s beef with Trump, the decision has already been made. 

Crypto stakeholders believe that the willingness of leaders to make sure the Fed does not only allow but support crypto will push other crypto adoption agendas forward.

Also, the Fed, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency took back two comments they made in 2023. It was about banks working with people in the crypto-asset sector who might be fraudsters.

”Inaccurate or misleading representations and disclosures by crypto-asset companies […] may be unfair, deceptive, or abusive, contributing to significant harm to retail and institutional investors,” the agencies said.

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