Whistleblowers in Senator Pat Toomey’s office have accused the Federal Deposit Insurance Corporation (FDIC) of stifling banks in their efforts to expand on crypto work.
Federal regulators may have taken a step too far in their efforts to stop banks from working with cryptocurrency companies according to Republican Senator Pat Toomey. In a letter addressed to the Acting Chairman of the FDIC Martin Gruenberg, whistleblowers in Senator Toomey’s office have come forward to say that the FDIC “may be improperly taking action to deter banks from doing business with lawful cryptocurrency-related (crypto-related) companies.”
The FDIC is one of the most important banking regulators in the U.S. and ensures retail customer deposits and supervises banks to establish their safety. According to the letter, the FDIC has asked member banks “requesting that they refrain from expanding relationships with crypto-related companies, without providing any legal basis for doing so.” The letter asks Gruenberg to account for these actions and to turn over documentation relating to the FDIC’s work with cryptocurrencies.
The FDIC sent a letter in April directing all insured banks that do business, or are looking to do business with crypto firms to inform the agency of their actions. The regulator expressed concern “that crypto assets and crypto-related activities are rapidly evolving, and risks of this area are not well understood given the limited experience with these new activities.”
Toomey says in the letter that one whistleblower reports that officials at the FDIF headquarters urged regional offices to downgrade their classification of one bank’s loan to a crypto firm. The letter continues to say that:
It is my understanding that it is highly atypical for FDIC headquarters personnel to be involved in reviewing an individual loan. If reports are true that there was nothing unusual about this loan (other than that it was to a crypto-related company) and that the loan amount was too small to affect the bank’s supervisory rating even if it had to write off the entire loan, this episode raises important questions.
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