Senator asks FDIC about allegations it discourages bank relations with crypto companies

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Regulation

Cryptocurrencies

Pat Toomey, ranking member of the United States Senate Banking Committee, has sent a letter to Federal Deposit Insurance Corporation (FDIC) director and acting chairman Martin Gruenberg informing him of allegations made by a whistleblower concerning FDIC activities. The senator suspects the FDIC “may be improperly taking action to deter banks from doing business with lawful cryptocurrency-related (crypto-related) companies.”

Toomey wrote that there is corroboration of whistleblower allegations that “personnel in the FDIC’s Washington, D.C. headquarters are urging FDIC regional offices to send letters to multiple banks requesting that they refrain from expanding relationships with crypto-related companies, without providing any legal basis for sending such letters.”

In addition, Toomey wrote that there were reports that staff at FDIC headquarters took the highly atypical step of contacting staff in a regional office to urge them to downgrade the status of a loan to a crypto-related company, adding:

“FDIC regional office staff reportedly interpreted the involvement of FDIC headquarters in this matter as an effort to change how loans to crypto-related companies are generally classified and to deter banks from extending such loans in the future.”

Judging from the letter, the alleged letters from the FDIC were sent on or about June 6. Toomey asks Gruenberg to confirm or deny the alleged activities by the end of the month and asks whether the FDIC legal division has provided an opinion on the alleged activities.

Related: Deposits at non-bank entities, including crypto firms, are not insured — FDIC

Toomey is a hawkish crypto advocate. He has been a vocal critic of Securities and Exchange Commission policy. He is also the author of the Stablecoin TRUST Act and introduced the companion legislation for the Virtual Currency Tax Fairness Act of 2022 in the Senate. He has expressed reservations about the issuance of a U.S. central bank digital currency.