The U.S.-based cryptocurrency advocacy group Blockchain Association has called on financial regulators to provide information relating to potential “debanking of crypto firms” following bank failures, including Signature, Silicon Valley Bank and Silvergate.
In a March 16 notice, the Blockchain Association said it had filed Freedom of Information Act requests with the Federal Deposit Insurance Corporation, the Federal Reserve Board of Governors, and the Office of the Comptroller of the Currency for documents and communications that could potentially show that regulators’ actions “improperly contributed” to the collapse of the three banks. According to Blockchain Association CEO Christine Smith, cryptocurrency firms “should be treated like any other legitimate business” in the US that has access to bank accounts.
“BA is investigating troubling allegations including account closures and refusals to open new accounts, which have become even more troubling since this week’s banking crisis,” the association said. “A crisis long-time opponents of cryptocurrencies have wrongly been quick to blame on technology.”
For many in the industry, the recent banking crisis began when Silvergate’s parent company announced on March 8 that it was “winding down operations” for a cryptocurrency bank. The Silicon Valley Bank followed on March 10, declaring bankruptcy after a run on deposits, and on March 12, the Treasury Department, the Fed and the FDIC announced the closure of Signature Bank.
At the time, a joint regulatory statement said that the action against Signature was taken to “protect the US economy by building public confidence in our banking system.” However, former U.S. Representative and Signature Board Member Barney Frank reportedly said the FDIC is sending a “strong anti-crypto signal” by shutting down the bank and some lawmakers are demanding answers.
An FDIC spokesperson told Cointelegraph that a bidding process has begun for banks interested in acquiring Signature and Silicon Valley Bank. They suggested that recent reports that the FDIC was asking potential buyers of bankrupt banks not to support any cryptocurrency services could be part of its “confidential marketing process.”
“The buyer tells the FDIC what assets and liabilities it is willing to accept from the bankrupt bank, and what money (if any) it will change hands,” the FDIC’s Dispute Resolution Guide says.
Related: U.S. Cryptocurrency Regulation Happens ‘Behind Closed Doors’ – Blockchain Association CEO
Prior to its closure, Signature was considered by many to be a large crypto-friendly bank in the United States, providing services to Coinbase, Paxos Trust, BitGo, and Celsius. Some in the space have speculated that the alleged attack by federal regulators on banks servicing crypto firms could force companies to turn to “more dubious” options.