Senator Pat Toomey of the United States said that whistleblowers told him that the FDIC was pressuring banks to stop doing business with crypto companies.
U.S. Sen. Pat Toomey (R-Pa.) said on Tuesday that he had heard that the Federal Deposit Insurance Corporation (FDIC) might be putting pressure on banks to stop them from doing business with crypto companies. He said this based on communications he had received.
Toomey wrote in a letter to Acting FDIC Director Martin Gruenberg that he had heard from “affected parties” and “whistleblowers” that the federal bank regulator had tried to “keep banks from doing business with legal cryptocurrency-related companies,” even though it is not illegal to do business with these companies. Toomey asked the regulator to confirm if any FDIC official had actually told banks not to do business with crypto firms and, if so, to explain why.
The letter was first written in American Banker on Tuesday.
Toomey talked about “Operation Choke Point,” a program that used to be run by the FDIC and the Department of Justice. Its stated goal was to get banks to stop doing business with payday lenders and financial fraud charges, but it seemed also to get banks to stop doing business with companies that were doing legal things, like selling guns.
“According to communications from a whistleblower that we have verified, staff at the FDIC’s headquarters in Washington, D.C. are telling FDIC regional offices to send letters to multiple banks asking them not to build relationships with crypto-related companies, without giving any legal reason to send such letters,” Toomey wrote. “…From what I understand, in at least one of these cases, a bank planned to give customers access to the trading platform of a crypto-related company through the bank’s mobile or internet banking app.”
Also, Toomey said it was “highly unusual” that FDIC officials told a regional branch to “downgrade” the classification of a loan a bank gave to a crypto company.
The FDIC said in a statement, “The FDIC is following laws that have been around for a long time to ensure that banks that deal with crypto do so in a safe and sound way that protects customers. This could mean that the FDIC asks an institution to wait to start crypto-related activities or stop growing them until supervisory feedback is taken into account. Due to the obvious risks in the crypto-asset markets, these are the right and necessary steps to take.”
The regulator has said in the past that banks should be careful about doing business with crypto companies.
In April, the FDIC sent an open letter to any banks or other institutions it oversees, telling them to get in touch with the FDIC before doing anything “crypto-related.” The regulator said it would look at the bank’s information to ensure it was “safe and sound” and give feedback if necessary.
“Depending on the type of crypto-related activity, the FDIC will ask for different information in each case. But the first notice to the FDIC Regional Director should give a detailed description of the activity and the institution’s proposed schedule for doing the activity “in the letter.
The letter is similar to one that the Federal Reserve put out this week. It also tells banks that it oversees to get in touch with the central bank before doing anything with crypto.
