The U.S. House Financial Services Committee looking into potential coordinated efforts by the U.S. regulators to de-bank the crypto market by restricting banking services to digital asset firms. The lawmakers assert “digital asset activity is not inherently risky,” and the action by banking regulators shouldn’t result in the de-banking of the crypto market.
US House Seeks Details on Potential De-Bank of Crypto
U.S. House Financial Services Committee Chairman Patrick McHenry, Digital Assets, Financial Technology and Inclusion Subcommittee Chairman French Hill, and Oversight and Investigations Subcommittee Chairman Bill Huizenga sent letters to Jerome Powell, Martin Gruenberg, and Michael Hsu seeking all records of the agencies.
The House will investigate whether the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of Currency coordinated an Operation Choke Point-type action to deny banking services to the crypto sector.
Along with my colleagues @PatrickMcHenry and @RepHuizenga, we called on bank regulators to explain potential coordinated efforts by the agencies to deny banking services to digital asset firms and the ecosystem. https://t.co/ScJYUlZ3IT
— French Hill (@RepFrenchHill) April 26, 2023
The potential Operation Choke Point 2.0 by the U.S. financial and banking regulators saw strong backlash from the crypto community and Congressmen such as House Majority Whip Tom Emmer. It led the U.S. House lawmakers McHenry, Hill, and Huizenga send letters to the FDIC, Treasury Department, Federal Reserve, and Office of the Comptroller of Currency’s on their actions and plans for the digital assets market.
The lawmakers believe the actions by the agencies are in contrast to the Biden Administration’s “Executive Order on Ensuring Responsible Development of Digital Assets”. The committee will excuse strategy against the crypto market at the expense of harming consumers and investors.
On January 2, the Fed, FDIC, and OCC issued a joint statement warning about crypto risks in the banking sector if banks continue to provide crypto-related services.
The letters state digital asset activity is not always risky. While the market is volatile, the FTX debacle and the banking crisis were not caused by crypto and its activities.
“The reaction by the federal prudential regulators to fraud and mismanagement should not lead to de-risking of the digital asset industry. Taken together, the actions of the Fed, FDIC, and OCC do not appear to be in reaction to recent events.
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