Four United States Republican senators led by Bill Hagerty have written a letter to the heads of federal banking regulatory agencies, questioning the ideological motivation behind recent regulatory moves in regard to cryptocurrency. They compared the regulatorsโ policies to the Obama administrationโs Operation Choke Point.
The senators addressed Federal Reserve Board Chair Jerome Powell, Federal Deposit Insurance Corporation (FDIC) Chair Marty Gruenberg and Office of the Comptroller of the Currency (OCC) Acting Comptroller Michael Hsu. The March 9 letter said that their agencies, along with the White House, have issued statements on heightened supervision that have resulted in unfortunate consequences for the cryptocurrency sector, such as the closing of crypto firmsโ bank accounts.
The senators were referring to the joint statement released by those agencies on Jan. 3 thatย said in part, โIssuing or holding as principal crypto-assets [โฆ] is highly likely to be inconsistent with safe and sound banking practices.โ In addition, they pointed to a February Fed policy statement that said, making specific reference to crypto, that โlegal permissibility is a necessary, but not sufficient, conditionโ for banking activity, and the Biden administrationโs January โroad mapโ that called for agenciesย toย โramp up enforcement.โ
โThis coordinated behavior seems disturbingly reminiscent of Operation Choke Point,โ the senators wrote. In that operation, โfederal regulators applied pressure on financial institutions to cut off financial services to certain licensed, legally operating industries simply because certain regulators and policymakers disfavored those industries.โ They added:
โWe are especially worried that overreaching behavior by the banking regulators will inevitably bleed into other legal industries.โ
The senators posed a number of questions to the regulators. They asked how their increased supervision will help consumers, whether it is possible for banks to provide services to crypto firms at all under the updated guidance, and whether the agencies plan to release similar guidance for other industries.
Related: Banks under pressure from US authorities to cut ties with crypto firms
With their letter, the senators are joining a conversation in the crypto community concerning the voluntary liquidation of Silvergate Bank. That talk mayย heat up with the FDICโs closing of Silicon Valley Bank.
Powell Hearing Today: US Senator Bill Hagerty said he will discuss cryptocurrencies along with the Fedโs interest rate plans at the hearing on The Semiannual Monetary Policy Report to the Congress. Federal Reserve Chairman Jerome H. pic.twitter.com/xazQSFtK3p
โ HappyMiner (@happyminerUS) March 6, 2023
Senators Mike Crapo, Thom Tillis and Steve Daines were co-authors of the letter. Hagerty introduced the Digital Trading Clarity Act in the Senate in October. That act would provide a safe harbor for cryptocurrency exchanges from some Securities and Exchange Commission enforcement actions.
