Cynthia Lummis, a Senator from Wyoming, has criticized the Federal Reserve’s recent decision to withdraw its crypto guidelines for banks, deeming it ineffective and merely symbolic. In a social media post, Lummis asserted that the steps taken by the Fed were superficial and primarily aimed at improving its public image.
Fed’s Announcement
The Federal Reserve announced the withdrawal of previous guidelines regarding banks’ dealings with crypto assets, in collaboration with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. The official statement noted, “On Thursday, the Federal Reserve Board withdrew its guidelines pertaining to banks’ activities involving crypto assets and dollar-based tokens.”
Despite retracting the guidelines, the Federal Reserve Board emphasized that it remains committed to aligning its policies with evolving risks in the financial landscape.
Lummis’ Critiques
Senator Lummis argues that the withdrawal is a superficial measure, indicating that the Fed still considers reputational risk in its oversight of banks. According to her, the Fed has not eliminated its policy labeling Bitcoin 
$111,426 and other crypto assets as unsafe. Additionally, she criticized the oversight of regulatory frameworks concerning the applications of crypto banks.
Furthermore, Lummis pointed out that former staff members still involved in regulating the crypto sector within the Fed reflect poorly on attempts to ease regulations. She emphasized that the withdrawal is insufficient and implies a need for more comprehensive measures in regulatory institution policies.
The Fed’s move to withdraw its guidelines may have various implications for the banking system and the digital asset market. While officials claim that the regulatory measures aim to balance innovation with safety, differing opinions exist regarding the adequacy of these steps.
The actions taken and subsequent criticisms indicate that a more thorough evaluation of the regulatory approach is necessary. Developments regarding the situation and potential regulatory changes will be closely monitored.
