Cryptocurrencies, blockchain, NFT and new trends

Blockchain Association seeks documents on crypto ‘de-banking’ from FDIC, Fed

Policy • March 16, 2023, 12:10PM EDT

Quick Take

  • The Blockchain Association sent FOIAs to the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation on Thursday. 
  • CEO Kristin Smith said the requests are “intended to uncover the truth behind the potential de-banking of crypto firms in the U.S.” 

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The Blockchain Association, one of the largest crypto lobbying groups, is investigating what it says is the potential “de-banking of crypto firms” following the failure of three banks over the past month.

The group sent Freedom of Information Act requests to the Federal Deposit Insurance Corporation, the Federal Reserve and the Office of the Comptroller of the Currency, asking for documents and communications regarding the issue.

“We see smoke that indicates a fire – the FOIA requests are intended to uncover the truth behind the potential de-banking of crypto firms in the U.S., including learning more about possible account closures of law-abiding crypto businesses,” Kristin Smith, the group’s CEO, said in an emailed statement. 

The group is “investigating allegations of de-banking – including account closures and refusal to open new accounts,” which it says may have contributed to the collapses of Signature Bank, Silicon Valley Bank and Silvergate. 

The association has big name members including Kraken and Ripple Labs.  

An OCC spokesperson said it “does not comment on correspondence.” The FDIC did not immediately respond to requests for comment.  The Federal Reserve declined to comment. 

Toxic message 

The New York Department of Financial Services seized crypto-friendly Signature Bank on Sunday to “protect depositors.” Former congressman Barney Frank, one of the bank’s board members, criticized the state regulator’s decision and claimed it “wanted to send the message that crypto is toxic.” 

NYDFS pushed back against the criticism and said the decision to take over Signature Bank was not related to the bank’s crypto business. Silicon Valley Bank and Silvergate Bank collapsed days earlier. 

There are also reports of crypto companies having their bank accounts closed without a notice or explanation, said Jake Chervinsky, chief policy officer at the Blockchain Association.  

“This disturbing trend suggests that regulators are trying to cut crypto entirely out of the banking system,” Chervinsky tweeted. He also accused regulators of breaking the law.  “If regulators are de-banking crypto companies, they’re breaking the law.”  

Risk management

Regulators have been vocal about their concerns surrounding the crypto industry. The Federal Reserve in January issued a statement in which it cited volatility as a key risk faced by banks with crypto exposure.

The FDIC, OCC and the Federal Reserve also issued a statement in February highlighting liquidity risks to banks and reminding them to “apply existing risk management principles.”

“Banking organizations are neither prohibited nor discouraged from providing banking services to customers of any specific class or type, as permitted by law or regulation,” the regulators said.  

Chervinsky tweeted that the association wants to know if that statement is true. 

Update: This story has been updated to include OCC comment.