Feds Are 'Weaponizing' Bank Crisis to Kill Crypto: Rep. Tom Emmer
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Feds Are 'Weaponizing' Bank Crisis to Kill Crypto: Rep. Tom Emmer

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8 months ago

The Republican Congressman and crypto supporter's comments come as former bank regulator and Coinbase exec Brian Brooks said regulators are trying to "choke off" crypto.

Feds Are 'Weaponizing' Bank Crisis to Kill Crypto: Rep. Tom Emmer


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A Republican congressman and a former bank regulator with deep crypto industry ties have accused federal agencies of using the current banking crisis to "choke off digital assets."

Minnesota Rep. Tom Emmer, the No. 3 ranking Republican, sent a letter to the chairman of the Federal Deposit Insurance Corporation on March 15 — accusing the agency and another banking regulator, the Office of the Comptroller of the Currency, of having "effectively weaponized their authorities over the last several months to purge legal digital asset entities and opportunities from the United States."

That comes in the wake of the voluntary closure of crypto-focused Silvergate Bank last week and the subsequent seizure and shuttering of two other banks with big crypto involvement that were suffering runs: Silicon Valley Bank and Signature Bank.

Emmer cited comments by Signature Bank board member and former Congressman Barney Frank that his institution was abruptly shut down Sunday night in order to "send a message" to banks to refuse to do business with the cryptocurrency industry. Frank co-authored the Dodd-Frank Act that tightened oversight of banks following the 2008 subprime mortgage crisis.

Federal banking regulators and those in New York and California — who actually ordered the shutdown of SVB and Signature before turning them over to the FDIC to liquidate — have denied that vigorously. And whether it succeeds in driving banks away remains to be seen.

Arguing that the Biden administration is pushing "American crypto firms, and their American customers, into offshore, unregulated, opaque and unsafe markets," Rep. Emmer said:

"In under a week, regulatory statement-driven market fear drove mass withdrawals at the few remaining banks that provide legal crypto firms access to financial services."

He asked FDIC Chairman Martin Gruenberg if his agency has "instructed banks under its supervision to not provide crypto firms banking services?" Rep. Emmer also asked:

"Have you communicated — explicitly or implicitly — to any banks that their supervision will be more onerous in any way if they take on new (or maintain existing) digital asset clients?"

Working Together

Rep. Emmer's opinion was shared by Brian Brooks, who was acting Comptroller of the Currency under President Donald Trump.

Brooks, who resigned as chief legal officer of U.S. crypto exchange Coinbase to take over the OCC, told CoinDesk on Wednesday that "it's pretty clear there has been a decision across the bank regulatory agencies… that crypto is inherently risky and needs to be extricated from the banking system." He added:

"My belief is that they are trying to send a signal that will eventually choke [crypto] off."

During his own time in the OCC, Brooks said he, the head of the FCC and the vice chairman of the Federal Reserve — who oversees bank supervision — had a weekly call to discuss their priorities for the week and how they could support each other.

Brooks, who is now on the board of blockchain software and mining hardware-maker BitFury, said that in this instance, he is "100% confident regulators were working together."

During his own time at the OCC, Brooks pushed hard to get banks to support crypto, even proposing a rule change requiring banks to "provide access to services, capital, and credit based on the risk assessment of individual customers, rather than broad-based decisions affecting whole categories or classes of customers."

While crypto wasn't explicitly mentioned, it was clear what industry Brooks was talking about.

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