A prominent digital asset trade group, of which Tacen is proudly a member, is probing federal regulators for information related to allegations that the agencies are systematically closing out and excluding digital asset firms from the US banking and financial system.
On Thursday, March 16, Blockchain Association submitted Freedom of Information Act (FOIA) requests to multiple federal agencies. Recipients include the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency, according to a press release by the organization. FOIA requests are formal, written requests from individuals or organizations submitted to federal agencies for specific information. Enacted in its original form in 1966, FOIA is designed to provide the public with the right to request access to records from any federal agency. Blockchain Association’s requests broadly ask multiple federal regulators to provide and release documents and communications involving the de-banking of digital asset firms in the United States.
Blockchain Association is a US-based, leading nonprofit organization dedicated to promoting a pro-innovation policy environment for the digital asset ecosystem. The organization seeks to advance the future of the digital asset economy in the US, promoting the potential of blockchain technology and shaping policy that ensures its success. In addition to Tacen, membership includes digital asset firms Circle, Uniswap, and Kraken. The organization functions as a collective voice of the digital asset industry in the pro-innovation national policy framework for the digital asset economy in the United States, providing representation in government relations and policy activities.
As part of its mission, Blockchain Association has been steadfastly investigating allegations of de-banking on behalf of its members and the US digital asset industry. Recently, federal regulators and industry participants have been systematically closing accounts for digital asset firms or denying opening of new accounts. According to Blockchain Association and many industry participants, such actions may have improperly contributed to the recent failures and closures of digital asset-friendly Signature Bank, Silicon Valley Bank, and Silvergate. Recent activities of federal and state agencies have also indicated hostility to emerging digital asset banking institutions. For instance, the Federal Reserve recently denied Wyoming-charted Custodia Bank’s application for a master account that would have allowed the digital asset bank to access wholesale payment systems and related fed services available to incumbent financial institutions across the US.
Recently, regulators have publicly warned lenders and banking institutions of the risks of engaging in activities involving digital assets or doing business with firms in the periphery. CEO of Blockchain Association, Kristin Smith, emphasized that “[b]usinesses need bank accounts to pay employees, vendors, and taxes.” Digital asset firms “are lawful businesses in the United States and should be treated like any other law-abiding business.”
Blockchain Association is also asking affected digital asset industry participants (including non-members) to submit their story confidentially at email@example.com as BA gathers industry input and information.
In recent months, the United States has become an increasingly hostile operating jurisdiction for digital asset firms due to hardline policing from regulators resulting from the collapse of FTX exchange and its fallout. But as often is the case with knee-jerk policy reactions devised following a crisis, sweeping regulatory changes can cause overcorrection that results in inequitable consequences to innovators and other industry participants previously operating lawfully and in good faith. As innovation suffers, so does the public.
Policy changes implemented without transparency and input from affected parties and the public are more likely to result in rent-seeking, capture by incumbent insiders, or error. The principle of FOIA is to hold federal agencies accountable by making information about their operations and decision-making processes available to the public. Recent and planned actions by federal banking and financial regulators pose grave risks to the digital asset industry, participants, and consumers. Such actions are not exempt from the principles of transparency that underly FOIA and public governance. Thus, Tacen fully supports Blockchain Association’s efforts to leverage FOIA to ensure that financial and banking regulators remain transparent and accountable.
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