The Federal Reserve’s recent decision to withdraw its restrictive guidance warning banks about crypto risks was seen by many as a positive shift for the digital asset industry. However, Senator Cynthia Lummis isn’t buying it.
On April 25, 2025, the pro-crypto Senator blasted the Fed, calling the move “lip service” rather than meaningful change. Lummis warned that despite the withdrawal of certain guidance, deep-rooted anti-crypto biases within the Federal Reserve still persist.
Blocking Access to Crypto-Friendly Banks
Senator Lummis emphasized that although the Fed pulled back one set of rules, it continues to deny several crypto-friendly banks access to master accounts. These accounts are crucial because they allow banks to connect directly to the Fed’s payment system. Without them, crypto-focused institutions face major operational hurdles.
One high-profile case is Custodia Bank, which is currently suing the Federal Reserve over significant delays in processing its master account application. Lummis argued that such actions show the Fed’s ongoing hostility toward the crypto sector, despite public gestures suggesting otherwise.
Critical Anti-Bitcoin Policies Remain in Place
Beyond master account access issues, Lummis pointed to other troubling signs.
The Senator noted that the Fed did not withdraw its Policy Statement on Section 9(13), which labels Bitcoin and other digital assets as “unsafe and unsound.” According to her, retaining this language undercuts any narrative of regulatory progress.
Moreover, Lummis criticized the Fed’s continued use of reputation risk assessments in supervising banks. This controversial approach targets industries that are legally operating but politically sensitive, such as oil, marijuana, and cryptocurrency. While agencies like the OCC (Office of the Comptroller of the Currency) and FDIC (Federal Deposit Insurance Corporation) have scaled back their reliance on reputation risk, Lummis claims the Fed has not.
This practice, she argues, effectively discourages banks from engaging with crypto companies, even if those companies operate legally and compliantly.
Operation Chokepoint 2.0: A Lingering Concern
Finally, Lummis raised alarms about what she called “Operation Chokepoint 2.0” an alleged coordinated effort under the Biden administration to systematically deny banking services to crypto firms. Despite official claims of neutrality, Lummis contends that the same Fed staff responsible for these anti-crypto measures remain in place, maintaining an entrenched bias against the digital asset sector.
Crypto companies, facing mounting challenges to access financial services domestically, have increasingly turned to offshore banking options as a result.
Senator Lummis’s pointed critique highlights the widening gap between public policy gestures and actual regulatory practices affecting the crypto industry. While the Fed’s withdrawal of some guidance has been welcomed by parts of the crypto community, voices like Lummis remind observers that the underlying regulatory environment remains hostile.
As crypto adoption continues to grow, the clash between digital innovation advocates and traditional financial regulators is likely to intensify in the months ahead.
