The code by David will work fine, but this is an easier and shorter solution:
foo = Proc.new { |prompt| prompt.echo = false }
new_pass = ask("Enter your new password: ", &foo)
verify_pass = ask("Enter again to verify: ", &foo)
You can also use an ampersand to assign a block to a variable when defining a method:
def ask(msg, &block)
puts block.inspect
end