Senator Lummis Challenges Federal Reserve’s Approach to Digital Assets

In his hearing before the Senate Banking Committee on February 11, Senator Cynthia Lummis (R-WY) grilled Federal Reserve Chair Jerome Powell. Lummis expressed grave concerns regarding the Fed’s lack of transparency in its approach to digital currencies and how it is regulating digital assets.

Accusations of Obstruction and Misinformation

Senator Lummis criticized the Federal Reserve for withholding crucial information related to digital asset policies. She argued that the Fed’s actions had created confusion and regulatory instability within the digital asset sector. Lummis stated, “The Fed is a black hole. It consumes information, but it never releases it.” She expressed frustration over the Fed’s reluctance to provide clear guidance, particularly regarding Wyoming’s digital asset regulations. Citing former Senator Pat Toomey’s claim that the Fed had “lied” to lawmakers about technical aspects of cryptocurrency legislation, Lummis demanded more transparency and cooperation from the central bank.

Lummis pressed Powell on whether the Fed would comply fully with the committee’s document requests. Powell responded affirmatively, saying, “Sure.” However, he clarified that while the Fed strives to be responsive, some requests may be beyond its capacity to answer. “We always work with the committee to be responsive to your requests,” Powell explained, adding that the institution’s ability to respond might be limited by certain constraints.

The issue of de-banking also came under scrutiny, as Lummis raised concerns about financial institutions cutting ties with digital asset companies. She questioned Powell about the steps the Fed would take to address this issue. “Do you commit to disciplining or removing any staff that are found to have engaged in de-banking activity?” she asked.

While Powell did not make any definitive commitments, he acknowledged the growing concerns surrounding de-banking. “I can’t make an open-ended commitment to remove anybody,” he stated. However, he emphasized that the Fed was determined to address the issue. Powell also noted that the Fed had already taken action by removing certain policies from its manual in response to previous concerns.

Despite Powell’s assurances, Senator Lummis and other lawmakers remained unsatisfied, continuing to call for stricter oversight and enhanced transparency in the Federal Reserve’s approach to digital assets.