Three members of the US Congress have sent a letter to the Federal Deposit and Insurance Commission (FDIC) seeking clarification on regulators’ efforts to deny access to banking services to the cryptocurrency industry. This worrying situation could harm innovation in this growing sector.
Pressure regulators
Regulatory uncertainty in the United States continues to raise an endless stream of questions. On April 25, Congressmen French Hill, Patrick McHenry and Bill Huizenga sent a joint letter at the FDIC.
The letter seeks information regarding actions by regulators to prevent banks from providing services to the crypto sector. Members of Congress are thus seeking to understand the measures adopted in this regard. They fixed at May 9 the deadline for providing the requested information.
Members of Congress pointed out that previously, under the Obama administration, regulators exerted pressure on financial institutions. The goal was to end banking services for certain politically unpopular industries. Among these are tobacco and gambling. Indeed, reputational risks, defined arbitrarily, were mentioned as justification.
Regulators are once again targeting banks to dissuade them from providing services to a specific sector, say delegates. This time, cryptocurrencies are the main target. They believe that this attitude is detrimental to innovation in the United States.
Risks are not inherent in digital assets
Members of Congress believe that “digital asset activity is not inherently risky”. They accuse regulators of using recent crypto-related scandals to advance their agenda.
Politicians point out that the collapse of cryptocurrency exchange FTX and Silicon Valley Bank is instead the result of classic fraud. Indeed, it is not an activity related to digital assets. Moreover, they specify that clients involved in cryptocurrency did not cause Signature Bank to fail.
Cautious regulators should focus their response to these scandals on cracking down on fraud and mismanagement, say members of Congress. They believe that the priority should not be the “de-risking” of the digital asset industry.
The actions of US regulators over the past few months appear to point to a coordinated strategy to “de-bank” the US digital asset ecosystem.
Members of Congress are seeking clarification on these actions, which may be holding back innovation. Indeed, the booming sector in question could play a major role in the global economy. By raising these concerns, elected officials seek to promote a fairer regulatory framework for players in the cryptocurrency industry. Thus, they hope to ensure that innovation and growth thrive in this promising field.
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