Four Republican senators, including Bill Hagerty, have written to the heads of federal banking regulatory agencies expressing concerns about recent regulatory moves in relation to cryptocurrency. The senators have questioned the ideological motivation behind the regulators’ policies, comparing them to the Obama administration’s Operation Choke Point. They argue that recent statements from agencies such as the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, have resulted in negative consequences for the crypto sector, such as the closure of bank accounts.
In the letter addressed to the heads of these regulatory agencies, the senators stated that they are “worried that overreaching behavior by the banking regulators will inevitably bleed into other legal industries.” The senators are concerned that the increased supervision by regulators will have a negative impact on crypto firms, which have already experienced bank account closures as a result of the agencies’ statements on heightened supervision.
The senators referred to a joint statement released by the agencies on Jan. 3, which stated that “Issuing or holding as principal crypto-assets […] is highly likely to be inconsistent with safe and sound banking practices.” They also pointed to a February policy statement from the Federal Reserve Board that stated, in reference to crypto, that “legal permissibility is a necessary, but not sufficient, condition” for banking activity. The senators also mentioned the Biden administration’s January “road map,” which called for agencies to “ramp up enforcement.”
The senators posed a number of questions to the regulators, including how their increased supervision will help consumers and whether banks can provide services to crypto firms under the updated guidance. They also asked whether the agencies plan to release similar guidance for other industries.
The senators’ letter has sparked discussion in the crypto community concerning the voluntary liquidation of Silvergate Bank. The FDIC’s closing of Silicon Valley Bank may also add to the conversation.
Hagerty introduced the Digital Trading Clarity Act in the Senate in October, which would provide a safe harbor for cryptocurrency exchanges from some Securities and Exchange Commission enforcement actions. The act is aimed at clarifying the regulatory status of digital assets, providing a regulatory framework for the crypto industry, and promoting innovation in the sector.
In conclusion, the senators are raising concerns about the negative impact of increased regulatory scrutiny on the crypto industry. They argue that the agencies’ statements on heightened supervision have resulted in bank account closures and other negative consequences for crypto firms. The senators are calling for clarification from regulators on their plans for increased supervision and whether it will affect other industries. The discussion sparked by the senators’ letter highlights the need for a clear regulatory framework for the crypto industry to promote innovation and protect consumers.
