The vice chairman of the Federal Deposit Insurance Corporation says the regulator needs a “new direction” – and that he expects it to begin later this month.
In a new speech, Vice Chairman Travis Hill acknowledges that the FDIC sent “pause” letters to over 20 banks, asking them to stop doing business with crypto firms – a revelation unearthed from a Freedom of Information Act (FOIA) request submitted by digital asset exchange Coinbase.
According to Coinbase Chief Legal Officer Paul Grewal, the unredacted documents showed a “coordinated effort” to shut down crypto activity in the US.
Says Hill,
“I continue to think a much better approach would have been – and remains – for the agencies to clearly and transparently describe for the public what activities are legally permissible and how to conduct them in accordance with safety and soundness standards. And if regulatory approvals are needed, those must be acted upon in a timely way, which has not been the case in recent years.”
Hill also criticized the regulator’s US banking industry’s agenda of “debanking,” or the deliberate shutting down or freezing of bank accounts of crypto firms. Several high-profile personalities in the crypto space claimed to be victims of the practice.
Hill says the right to one’s bank account should be foundational to the modern economy.
“Closely related to the agencies’ recent approach to digital assets is the problem of ‘debanking.’ Over the past few years, there have been various accounts of individuals and businesses associated with the crypto industry losing access to bank accounts without explanation. This follows a long history of other types of customers experiencing the problem of debanking, including the politically disfavored business groups targeted by the original ‘Operation Choke Point,’ individuals associated with certain religious or political groups, and many others.”
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