Four United States Republican senators, led by Senator Bill Hagerty, have recently sent a letter to the heads of the federal banking regulatory agencies, questioning the ideological motivations behind regulatory moves regarding cryptocurrency. The letter compared the regulators’ policies to the Obama administration’s 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 in their March 9 letter. They noted that statements from the agencies, along with the White House, have resulted in a variety of negative consequences for the cryptocurrency sector, such as the closure of crypto firms’ bank accounts.
The senators were referencing the joint statement released by those agencies on Jan. 3 that said in part, “Issuing or holding as principal crypto-assets […] is highly likely to be inconsistent with safe and sound banking practices.” Additionally, they mentioned the February Fed policy statement which said, making reference to crypto, that “legal permissibility is a necessary, but not sufficient, condition” for banking activity, and the Biden administration’s January “road map” that called for agencies to “ramp up enforcement.”
“This coordinated behavior seems disturbingly similar to Operation Choke Point,” the senators wrote. In that operation, “federal 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.” They added:
“We are especially worried that overreaching behavior by the banking regulators will inevitably bleed into other legal industries.”
The senators posed a series of inquiries to the regulatory bodies. They asked how their increased supervision will help consumers, whether it is possible for banks to provide services to crypto companies 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
The senators are joining a conversation in the crypto community regarding the voluntary liquidation of Silvergate Bank. That talk may heat up with the FDIC’s closing of Silicon Valley Bank.
Powell Hearing Today: US Senator Bill Hagerty said he will discuss cryptocurrencies along with the Fed’s interest rate plans at the hearing on The Semiannual Monetary Policy Report to the Congress. Federal Reserve Chairman Jerome H. pic.twitter.com/xazQSFtK3p
— 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 haven for cryptocurrency exchanges from some Securities and Exchange Commission enforcement actions.
