Senator Pat Toomey revealed that the FDIC is strongarming banks against working with crypto companies.
Covered:
- Senator Pat Toomey And The FDIC
- What This Means For Banks And Crypto
Senator Pat Toomey And The FDIC
US Senator Pat Toomey says his office has received complaints that the Federal Deposit Insurance Corporation (FDIC) is asking banks to curtail their involvement with crypto-related companies, despite the fact that the involvement is perfectly legal. As a result, Toomey sent correspondence to the acting chairman of FDIC Martin Gruenberg asking for the government agency to explain its stance on crypto.
“According to whistleblower communications that we have corroborated, 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,” Toomey wrote in the letter.
The FDIC is tasked with ensuring the stability of the banking system. They are funded by banks and in the event of closure, they protect American citizens’ bank accounts up to 250k USD.
The FDIC’s actions are raising alarms for the crypto-friendly senator. “Given the FDIC’s involvement under your leadership in the Obama administration’s notorious Operation Choke Point, which sought to coerce banks into denying services to legal yet politically disfavored businesses, it is important to better understand the actions the FDIC is now taking and the legal basis for them,” Toomey said.
What This Means For Banks And Crypto
Crypto is designed to combat things like Operation Choke Point. At least kind of. Ideally, crypto, which is supposed to be self-sovereign, allows for immutability. If someone is doing business that the government doesn’t like too bad, miners verify transactions not federally regulated banks.
The problem is, crypto is still very reliant on fiat. Most things are bought with fiat, not crypto. Not to mention, if you start putting your money into something the government doesn’t want you to, they can blacklist you at a snap of a finger, or get your transfers to a bank blocked.
The reality is the network isn’t strong enough to be self-sustaining, at least not yet. So, the FDIC doing what the whistleblowers are alleging they are is a pretty big deal. If they are coercing banks to stop working with crypto companies, that’s definitely not a good thing.
Forget for a minute that they are ignoring the work done by representatives of elected officials, ultimately it’s up to the banks to decide what they want to do. They don’t have to follow the FDIC’s guidance. Now thanks to Senator Toomey it’s even easier for them to continue business as usual.
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