On March 16, the Blockchain Association (BA), the US cryptocurrency advocacy group, lodged a Freedom of Information Act request (FOIA) to government agencies including the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency. Since 1967, the FOIA has enabled any member of the public to request formal records from federal agencies that may not be publicly available. In light of the recent collapse of Silicon Valley, Silvergate and Signature banks, BA has exercised this right to investigate the truth behind what appears to be a potential de-banking of lawful crypto firms in the US.
Barney Frank, a former US House of Representatives member, claimed that the FDIC’s closure of the crypto-friendly Signature Bank was a ‘strong anti-crypto message’ from the authorities. This was as both Silvergate and Signature were solvent when federal authorities stepped in. The regulators justified their decision in a joint statement that the bank closure was necessary to:
Protect the US economy by strengthening public confidence in our banking system.
The FDIC has denied the rumour that the agency requires all potential buyers of the collapsed banks to divest crypto activities, making reference to the FDIC chairman Martin Gruenberg’s previous statement that FDIC does not prohibit or discourage banks from serving customers of:
Any specific class or type, as permitted by law or regulation.
Nevertheless, there are rising concerns that crypto businesses could be forced to turn to riskier alternatives as a result of the de-banking of crypto firms in the US. BA further noted the troubling allegations made by industry participants including challenges with opening new bank accounts and closure of existing ones. The CEO of BA, Kristin Smith voiced this concern:
Businesses need bank accounts to pay employees, vendors and taxes…these are lawful businesses in the United States and should be treated like any other law-abiding business.
It remains to be seen whether the requested documents and communications from the federal agencies could uncover any truth behind the rumours of an anti-crypto agenda by the US government around the failure of the three banks.