Overview
• The Blockchain Association has sent Freedom of Information Act (FOIA) requests to the Federal Reserve (the Fed), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), seeking information about the sudden closure of bank accounts held by cryptocurrency companies.
• Reports of debanking of cryptocurrency firms have been increasing, with many companies having their bank accounts closed without notice and without explanation.
• This move follows several recent hostile actions from regulators such as a joint statement issued by banking regulators warning against crypto-assets and a denial of membership application from Caitlin Long’s Custodia Bank due to concerns regarding risks associated with crypocurrency assets.
The Blockchain Association Takes Action
The Blockchain Association, a US-based non-profit trade association for the blockchain and cryptocurrency industry, has sent Freedom of Information Act (FOIA) requests to the Federal Reserve (the Fed), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC). Through these requests, they are seeking information about why there has been an increasing exclusion of cryptocurrency companies from traditional financial institutions. The move comes as regulatory scrutiny on cryptocurrencies continue to increase.
Reports Of Debanking Crypto Companies
The reports that cryptocurrency firms are facing exclusion from banking systems have grown more frequent in recent weeks. Several crypto companies have had their bank accounts suddenly closed without any explanation or prior notice. These reports become even more concerning after failures such as those experienced by Silvergate, Silicon Valley Bank and Signature Bank come into play. It appears as though regulators may be taking steps to remove crypto companies entirely from banking systems altogether.
Regulators Take Hostile Actions
In response to this development, regulators began taking hostile actions towards crypto firms starting on 3 January when they issued a joint statement warning about “key risks associated with crypto-assets and crypto-asset sector participants” which could be seen as part of their effort to debank these entities. On 27 January, The Fed issued a statement saying banks cannot conduct “crypto-asset related activities” like issuing or holding cryptocurrencies as a principal which was then applied officially on 7 February despite not following proper rulemaking process. At that same time, The Fed also denied membership application from Caitlin Long’s Custodia Bank citing “concerns regarding heightened risks associated with its proposed cryptoservices” among other reasons.
Blockchain Association Requests Information
In light if these events it is now clear why The Blockchain Association decided it was necessary to take action through sending FOIA requests in order to try get more information out of financial regulators regarding this issue so appropriate measures can be taken against them if needed in order for justice to prevail for those affected by unfair practices by those who are supposed keep our banking system safe but instead use it for personal gains or interests instead .