Senator Cynthia Lummis (R-Wy) is asking her Republican colleagues to withhold support for Jay Powell’s renomination as Chair of the Federal Reserve, citing what she claims is unlawful treatment of crypto institutions in her home state.
According to a source in Lummis’s office, the pro-Bitcoin Wyoming Republican is also urging Senate colleagues to block President Biden’s other Fed nominee, Lael Brainard, unless the pair of nominees adopt a more crypto-friendly stance.
Lummis’s concerns relate to so-called Special Purpose Depository Institutions or SPDIs, which are a new type of crypto-native bank to which Wyoming lawmakers have granted a special charter to operate.
Two crypto companies, the exchange Kraken and the stablecoin issuer Avanti, received SPDI charters from Wyoming in 2020. But their banking ambitions remain in limbo since the Federal Reserve has yet to approve applications from the companies to receive accounts at the central bank.
According to a Wednesday op-ed by Lummis in the Wall Street Journal, the delay amounts to deliberate and unlawful obstruction. She claims that the Fed’s rationale for the delay—that it needs to deliberate whether SPDIs are banks—is a fig-leaf since the Wyoming entities check all boxes for being a bank under the Federal Reserve Act, including their possession of requisite insurance and custody requirements.
Lummis characterized the Fed’s treatment of SPDIs as a dereliction of legal obligations by Powell and Brainard.
“I believe both are smart and qualified. But while Mr. Powell and Ms. Brainard have said they want to promote responsible financial innovation, when Wyoming provided a perfect opportunity the Fed instead inexplicably chose to ignore its legal obligations. I want to know why but haven’t received an answer,” she wrote in the editorial.
It’s unclear whether Lummis’s pressure on her Senate colleagues to withhold support for the nominations will affect the confirmation process of Powell and Brainard. According to Bloomberg, the chair of the Senate Banking Committee, Sherrod Brown (D-Oh), plans to hold a vote on the pair as soon as this month, saying “Both of them will be confirmed.”
But while some Republicans have indicated that they will support Powell’s nomination, the margin could be tight given that progressive Democrats—most notably Elizabeth Warren (D-Ma)—have said they will not vote for him.
Meanwhile, a major fight this summer over a crypto provision in President Biden’s infrastructure bill showed that the cryptocurrency industry has gained new clout in Washington, D.C. If Lummis is able to harness some of that new influence, Powell’s confirmation process could become more rocky.