Congressman accuses administration of choking off crypto activity

Congressman Tom Emmer sent a letter to the FDIC Chairman asking for clarification that the FDIC has instructed banks to not provide banking services to crypto clients.

As the banking crisis rages on, it is looking suspiciously like the Biden administration is doing its utmost to choke off banking services to crypto companies, and by so doing, drive them offshore to regulatory jurisdictions where consumers may have much less protection.

Get people away from crypto

Congressman Tom Emmer wrote a letter yesterday to FDIC Chairman Martin Gruenberg, accusing federal financial regulators of “weaponizing recent instability in the banking sector” in order to “get people away from crypto”. With this last phrase he was quoting former Congressman, Barney Frank, co-author of the Dodd-Frank act.

Today, I sent a letter to FDIC Chairman Gruenberg regarding reports that the FDIC is weaponizing recent instability in the banking sector to purge legal crypto activity from the U.S. 👇 pic.twitter.com/fDmaA0XGWv

— Tom Emmer (@GOPMajorityWhip) March 15, 2023

In his letter Congressman Emmer brought up the January 3 joint statement by the Treasury, Federal Reserve, and FDIC, in which they discouraged banks from holding crypto or servicing crypto clients. He said that the Federal Reserve had published this as a statement in the federal register without first following a “public comment process”.

He also referred to the White House’s publishing of “The Administration’s Roadmap to Mitigate Cryptocurrencies’ risk”, saying:

“This report summarizes President Biden’s political plan to lawlessly abuse the Administrative State to push American crypto firms, and their American customers, into offshore, unregulated, opaque, and unsafe markets.”

A lazy and destructive regulatory strategy

Emmer called the Biden Administration’s effort to choke off crypto assets from the United States as a “lazy and destructive regulatory strategy”, which he saw as suppressing innovation and of driving crypto and its U.S. participants offshore to “less sophisticated regulatory jurisdictions”.

The Congressman ended the letter by asking 3 questions of the FDIC Chairman.

Opinion

The banking system is falling before our eyes. Many banks are on the brink of failure, which is being staved off for the time being by central banks promising to repay depositors of failed banks, or by offering liquidity.

The FDIC is an organisation that is supposed to make depositors whole up to the amount of $250,000. However, in the case of the Silicon Valley Bank, 97.5% of depositors had more than that on deposit.

The FDIC knew that it had to make all depositors whole or far worse bank runs would have been widespread straight away. In its meeting back in November of last year, it was joked by one FDIC member that:

“the public that has more full faith and confidence in the banking system than maybe the people in this room do,”

It was openly discussed that bail-ins would inevitably take place, and that the public should not be made aware that this could happen.

It now appears that the joke is on the FDIC. Should any bail-ins occur, then a full run on the banking system would start the very next day. The FDIC will no doubt be fully aware of this now. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.