As U.S. senators prepared to gather for a hearing about U.S. debanking of crypto clients, the interim chief of the Federal Deposit Insurance Corp. said his agency is overhauling its digital assets supervision and revealed more correspondence on Wednesday in which FDIC officials steered banks away from cryptocurrency business.
Travis Hill, the acting FDIC chairman tapped by President Donald Trump, has thrown open more of the agency’s past documents and said the U.S. banking regulator will be reconsidering its previous crypto guidance that deliberately kept banks an arm’s length away from what had been seen as the unregulated volatility of crypto. The past letters between the FDIC and bank have been the focus of a court Freedom of Information Act battle between Coinbase and the agency, in which the courts had directed the regulator to share more information.
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Meanwhile, Hill said the FDIC will be “providing a pathway for institutions to engage in crypto- and blockchain-related activities while still adhering to safety and soundness principles,” according to a statement issued before the start of a Wednesday hearing in the Senate Banking Committee on this topic.
“I directed staff to conduct a comprehensive review of all supervisory communications with banks that sought to offer crypto-related products or services,” he said. “While this review remains underway, we are releasing a large batch of documents today, in advance of a court-ordered deadline of Friday.”
Hill, who will run the FDIC until Trump puts forward a permanent candidate, characterized the agency as deliberately making it impossible for banks to handle crypto business.
“Requests from these banks were almost universally met with resistance, ranging from repeated requests for further information, to multi-month periods of silence as institutions waited for responses, to directives from supervisors to pause, suspend, or refrain from expanding all crypto- or blockchain-related activity,” he said.
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When the Senate hearing got underway, Chairman Tim Scott, a South Carolina Republican, called the situation at the FDIC a “disgusting and disheartening picture of abuse” and praised Hill’s actions.
At the hearing, Nathan McCauley, the co-founder and CEO of federally chartered crypto bank Anchorage Digital, shared his account of Anchorage being severed from banking relationships because of regulatory pressure.
“To say this is pervasive is an understatement,” he told the senators in his testimony. “It’s been across the entire industry, everybody has dealt with this.”
He called it so common that “it became background noise” in which it was “just assumed that if you were a crypto company, you would have trouble getting bank services.”
He contended that the pressure from regulators ran counter to what U.S. bankers actually wanted to do in the digital assets sector.
“All of the big banks wanted to work with crypto and were scared away from it by the regulatory apparatus,” he said.
Senator Elizabeth Warren, the committee’s ranking Democrat, sought to highlight the other segments of the U.S. population that are routinely blocked from banking services. But she did agree with McCauley’s central point.
“I don’t think for a second that you should be locked out of our banking system,” she said. “In many cases, it is wrong for banks to close accounts and threaten your ability to make payroll or pay rent on time without even providing an explanation, so long as you are following the law.”
