The association submitted Freedom of Information Act requests as part of an investigation into how regulators’ actions “improperly contributed” to the collapse of three banks.
The United States-based crypto advocacy group Blockchain Association called on financial regulators to provide information related to the potential “de-banking of crypto firms” in the wake of the failures of banks including Signature, Silicon Valley Bank, and Silvergate.
In a March 16 notice, the Blockchain Association said it had submitted Freedom of Information Act requests to the Federal Deposit Insurance Corporation, the board of governors of the Federal Reserve System, and the Office of the Comptroller of the Currency for documents and communications that could potentially show regulators’ actions “improperly contributed” to the collapse of the three banks. According to Blockchain Association CEO Kristin Smith, crypto firms “should be treated like any other law-abiding business” in the U.S. with access to bank accounts.
“BA is investigating troubling allegations — including account closures and refusal to open new accounts — which have grown more concerning in the wake of this week’s banking crisis,” said the association. “A crisis that long term crypto opponents have rushed to blame, incorrectly, on the technology.”
1/ TODAY: we sent FOIA requests to the following govt agencies, seeking info on the potential de-banking of lawful crypto business:
Board of Governors of the Federal Reserve System
and the OCChttps://t.co/GdjNT6sWdU pic.twitter.com/vB4He5oQfY
— Blockchain Association (@BlockchainAssn) March 16, 2023
For many in the space, the recent banking crisis began with Silvergate’s parent company announcing on March 8 that it would “wind down operations” for the crypto bank. Silicon Valley Bank followed on March 10 with its own failure after a run on deposits, and the Treasury, Fed, and FDIC announced the closure of Signature Bank on March 12.
At the time, a joint statement from the regulators said the action against Signature was taken to “protect the U.S. economy by strengthening public confidence in our banking system”. However, former U.S. Representative and Signature board member Barney Frank reportedly claimed the FDIC was sending a “strong anti-crypto message” in shutting down the bank, and some lawmakers are demanding answers.
An FDIC spokesperson told Cointelegraph the bidding process for banks interested in acquiring Signature and Silicon Valley Bank had begun. They suggested recent reports that the FDIC requested potential buyers of the failed banks not support any crypto services could have been part of its “confidential marketing process”.
“An acquirer tells the FDIC what assets and liabilities from the failed bank it is willing to take, as well as what (if any) money will change hands,” according to the FDIC’s resolution handbook.
Related: US crypto regulation happening ‘behind closed doors’ — Blockchain Association CEO
Prior to its closure, many considered Signature to be a major crypto-friendly bank in the United States, providing services to Coinbase, Paxos Trust, BitGo, and Celsius. Some in the space have suggested that federal regulators’ perceived attack on banks servicing crypto firms could force companies to turn to “shadier” options.