Two major crypto-friendly banks announced their shutdown last week, Silvergate Bank and Signature Bank. In the case of Signature Bank, the FDIC officials alongside the Fed took the decision to shut down stating that it would help prevent the contagion from spreading.
On Wednesday, March 15, Congressman Tom Emmer wrote a letter to the FDIC chairman Gruenberg seeking answers to questions over the reports that the regulatory is weaponizing the current instability in the US banking system in order to choke legal crypto activity in the United States.
Today, I sent a letter to FDIC Chairman Gruenberg regarding reports that the FDIC is weaponizing recent instability in the banking sector to purge legal crypto activity from the U.S. 👇 pic.twitter.com/fDmaA0XGWv
— Tom Emmer (@GOPMajorityWhip) March 15, 2023
There have been multiple questions raised over the last week over the singling out of financial institutions by regulators. Some also believe that this is a message from regulators asking people to stay away from crypto.
Tom Emmer Lashes Out At Biden Administration Over Crypto Policy
Congressman Tom Emmer cites the timeline of measures initiated by the Fed, the FDIC, and other regulators discouraging banks from holding crypto assets. He added that on January 27, 2023, the White House National Economic Council published “The Administration’s Roadmap to Mitigate Cryptocurrencies’ Risks”.
In his letter, Tom Emmer writes that this report summarizes Biden’s political plan to “flawlessly abuse” the administrative state and push American crypto firms and their firms into offshore, unregulated, opaque, and unsafe markets.
Emmer said that The Administration’s lazy and destructive regulatory strategy seeks to choke out crypto from the US financial system. He added that this strategy could have a “disastrous effect” as most crypto exchanges operating offshore serve American customers without much transparency, as in the case of FTX. The Congressman has asked some poignant questions to the regulators.
- Has the FDIC instructed banks under its control to not provide crypto firms with banking services?
- Have they communicated explicitly to banks that their supervision will be more “onerous” if they take new crypto clients?
- There have been allegations that the banks’ closures happened due to the exposure to “risky” assets. However, data shows they seem to be impacted less by the volatility in crypto and more due to the interest rate hikes. Has the FDIC provided any guidance to banks to mitigate risks from interest rate hikes?
Popular as the “Crypto King of Congress”, Congressman Emeer has been vocal about his support for the industry. He believes in measured regulatory actions without stifling innovation in the financial space.