By Richard Davis
Over the past few months, about three crypto-friendly banks, Silvergate, Silicon Valley Bank, and Signature banks, have collapsed. And the Blockchain Association has linked the occurrences as a potential “de-banking of crypto companies” by the regulators.
Hence, to investigate its claims, the association sent Freedom of Information Act Requests (FOIA) to the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Federal Reserve. According to reports, the FOIA craves the indulgence of the three regulators to release documents and communications associated with the current issue.
In the requests, the Blockchain Association’s CEO, Kristin Smith, stated that it suspects a brewing action of the feds to debank crypto firms in the United States. Hence, the group is bent on uncovering the truth behind the motion. In addition, Kristin said that they would investigate why banks may refuse to open new accounts for or close down legal crypto businesses’ accounts.
The Blockchain Association is one of the strongest crypto lobbyists. It has many members who are big guns in the crypto industry, such as Ripple Labs and Kraken. However, despite how delicate the group’s request was, none of the three regulators responded. An OCC representative reportedly said the firm would rather not comment on such correspondence. Meanwhile, the FDIC and the Federal Reserve refused to comment on the issue.
Regulators Might Be De-banking Crypto Firms
Meanwhile, on Sunday, the New York Department of Financial Services (NYDFs) restricted the Signature Bank under the pretext of protecting depositors. Criticizing the regulator’s action, former congressman Frank Barney stated that the move could signal the wrong signal that crypto is toxic to investors. Responding to the criticism, the NYDFs claimed that it seized Signature Bank for reasons unrelated to its involvement in the crypto business.
Reports also revealed that the other crypto-friendly banks, Silvergate and Silicon Valley Banks, had earlier shut down before Signature Bank’s incident. Furthermore, many crypto firms reportedly suffer sudden closure of their bank accounts without prior notice or further explanation from their banks.
Jake Chervinsky, the CPO at the Blockchain Association, commented that the unfavorable recurrent issue points out that regulators plan to cut the crypto industry loose from the banking system. He also claimed that if the authorities are de-banking crypto firms on purpose, then they are breaking the law.