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The United States is investigating crypto debanking

United States House Financial Committee Republicans look for records to show

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TL;DR

  • Lawmakers are investigating potential coordinated efforts by US federal agencies to deny banking services to digital asset firms and related entities.
  • Concerns have been raised about the revival of coordinated actions previously used to curtail areas of commerce deemed objectionable.
  • Examples of regulatory pressure on the digital asset ecosystem include the Biden administration stopping a rule designed to prevent improper activity and OCC and FDIC issuing guidance to banks.

The United States is currently investigating the possibility of coordinated efforts by federal agencies to deny banking services to digital asset firms and related entities.

This comes after lawmakers from the House Financial Services Committee and two subcommittees sent letters to key financial regulators requesting information on their actions and agendas toward the digital asset ecosystem.

Revival of coordinated actions in the United States?

In the past, the Obama administration coordinated actions to curtail areas of commerce it deemed objectionable, relying on the concept of ‘reputational risk.’

Regulators pressured financial institutions to deny services to customers or terminate existing relationships, targeting industries such as gun dealers, pawn shops, tobacco stores, and payday lenders.

Today, lawmakers are concerned that federal prudential regulators are attempting to suppress innovation in the United States by discouraging banks from providing services to digital asset firms and related entities.

Examples of Regulatory Pressure on the Digital Asset Ecosystem

Since 2021, there have been several instances of regulators taking steps that seemingly discourage banks from providing services to digital asset firms.

The Biden administration, for instance, stopped a rule designed to prevent improper activity in this area. In November 2021, the OCC issued guidance urging banks to provide services related to digital assets only if they could assure regulators in writing that they could do so in a “safe and sound manner.”

The FDIC, in April 2022, directed all FDIC-supervised institutions to provide written notice of their intent to engage in or with digital asset-related activities.

Lawmakers argue that digital asset activity is not inherently risky and that recent events involving FTX, Silicon Valley Bank, and Signature Bank were not caused by digital asset-related customers.

They believe that the actions of the Fed, FDIC, and OCC do not appear to be in reaction to recent events or the result of a sudden desire to protect financial institutions from risky behavior, but instead suggest a coordinated strategy to debank the digital asset ecosystem in the United States.

The investigation into crypto debanking highlights the increasing scrutiny of the digital asset industry and raises concerns about the potential impact of regulatory pressure on innovation within the sector.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Jai Hamid

Jai Hamid is a passionate writer with a keen interest in blockchain technology, the global economy, and literature. She dedicates most of her time to exploring the transformative potential of crypto and the dynamics of worldwide economic trends.

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