• The Blockchain Association has requested information from financial regulators regarding the exclusion of cryptocurrency companies.
• Reports of debanking of cryptocurrency firms have been increasing, with many companies having their bank accounts closed without notice and without explanation.
• This move follows several recent hostile actions from regulators, such as a joint statement warning of risks associated with crypto-assets and a final rule issued by the Fed denying a membership application from Caitlin Long’s Custodia Bank.
Conspiracy to Debank Crypto Companies?
The Blockchain Association, a US-based non-profit trade association for the blockchain and cryptocurrency industry, has sent Freedom of Information Act (FOIA) requests to the Federal Reserve (the Fed), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC). It seeks information about reports that many cryptocurrency companies have had their bank accounts closed suddenly and without explanation.
Blockchain Association Takes Action
This move comes as the crypto industry faces increasing regulatory scrutiny and pushback from traditional financial institutions. The Blockchain Association is taking action in order to seek out more information on why this trend is occurring, as well as collecting evidence from those affected.
Hostile Actions From Regulators: A Timeline
The move by the Blockchain Association follows several recent hostile actions from regulators. On 3 January, banking regulators issued a joint statement warning of „key risks associated with crypto-assets and crypto-asset sector participants.“ On 27 January, the Fed issued another statement saying that banks cannot conduct any activities related to cryptocurrencies like issuing them or holding them as principal. Lastly, on 7 February, The Fed published this rule as final despite not following valid rulemaking process. At this same time it denied an application from Caitlin Long’s Custodia Bank due to concerns regarding risks associated with its proposed cryoto business model.
Increasing Regulatory Scrutiny
The reports are concerning, especially after failures at Silvergate Bank, Silicon Valley Bank, and Signature Bank all occurred recently. This suggests that regulators are trying to remove cryptocurrency companies entirely from traditional banking systems in order to avoid greater risk exposure or other issues associated with them handling digital assets directly instead through intermediaries such as custodians or exchanges.
Crypto companies must remain vigilant when dealing with financial institutions due to increasing regulatory uncertainty in this area. The Blockchain Association is taking proactive steps in order to ensure that these businesses are not arbitrarily excluded by banks or other financial services providers unfairly due to political reasons over legitimate ones based on risk assessment criteria applied equally among all industries equally regardless of whether they involve digital assets or not