Lummis claims the Fed is ‘violating the law’ by delaying the Wyoming blockchain bank

Wyoming’s Republican senator has urged her colleagues to vote against Fed Chairman Jay Powell.

Cynthia Lummis, a Republican senator from Wyoming, has asserted that the Federal Reserve is “violating the law” by delaying the processing of applications from crypto-native institutions for central bank accounts.

Lummis stated in an op-ed for the Wall Street Journal on Nov. 30 that the Federal Reserve was unjustly penalising Special Purpose Depository Institutions (SPDIs), sometimes known as ‘blockchain banks,’ in her home state. She urged her Republican colleagues to vote against President Biden’s re-appointment of Federal Reserve Chairman Jay Powell on Nov. 23.

Wyoming’s state legislature legalised SPDIs in February 2019 to assist firms who are unable to get banking services from the Federal Deposit Insurance Corporation (FDIC) owing to their cryptocurrency activities.

Two Wyoming SPDIs, Kraken and Avanti, gained bank licences in 2020. They registered for master accounts with the Federal Reserve Bank of Kansas City shortly afterwards. Their applications have not yet been granted.

The state has been debating whether SPDIs qualify as banks under federal law. Lummis said in the piece that SPDIs should be designated banks under federal law “without a doubt” and that “Wyoming ticked every box.” She said that SPDIs comply with the Federal Reserve Act’s definition of a bank.

She asserted that the Fed is “in reality breaching the law” by delaying approval of the SPDIs, citing federal court rulings that the Fed “has a responsibility to provide payment system access to all banks and credit unions doing authorised activity.”

Lummis filed records on Oct. 7 showing that on Aug. 16, she acquired an unknown quantity of Bitcoin (BTC) valued between $50,001 and $100,000.

Lummis made the purchase less than two weeks after she and several senators sought to alter President Joe Biden’s infrastructure plan with a pro-crypto amendment.

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