Crypto Faces Banking Woes, This Non-Profit Presses Government for Answers

The U.S.-based non-profit Blockchain Association (BA) requested information from regulators in the country about an alleged de-banking of crypto companies. Over the past months, the sector has seen some of its most prominent actors lose access to accounts, the ability to process transfers in fiat currency, and more.

The collapse of three major pro-crypto financial institutions, the Silicon Valley Bank, Silvergate, and Signature, are poised to throw fuel into the fire. The nascent industry lost its most significant financial partners, and while many scramble to find a new home for their capital and make payroll, the U.S. goes on the offensive.

U.S. Government De-Banking Crypto Companies On Purpose?

Per an official statement, the BA requested information from the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency. The non-profit claims that these agencies may have “improperly contributed to the failures” of the pro-crypto banks.

As mentioned, the nascent industry has had to open new accounts without these institutions, but with many difficulties, according to the Blockchain Association. The non-profit claims:

The crypto industry is building the next generation of the internet and financial services. This is important work that has created tens of thousands of American jobs. Businesses need bank accounts to pay employees, vendors, and taxes. These are lawful businesses in the United States and should be treated like any other law-abiding business.

Chief Policy Officer at the Blockchain Association Jake Chervinsky claims that the non-profit has received “troubling reports” about companies losing their account without “notice and no explanation.” In that sense, Chervinsky believes that the U.S. is trying to cut the nascent sector from the banking system.

This strategy could be fatal for these companies and the digital asset industry. If the BA can prove that U.S. regulators are abusing their power to attack crypto, they could make the case that they are “breaking the law” and committing illegal actions. Chervinsky said:

It can take a long time to get responses to FOIA requests, but we’ll pursue them aggressively, and we’ll share what we can as soon as we’re able. In the meantime, we need your help. If debanking has directly affected you or your company, we want to know about it.

Companies can share information via the following email address: [email protected]. The BA confirmed that all information and data would remain confidential.

Sleeping With The Fishes, U.S. Sends A Message

As Bitcoinist reported this week, there have been growing rumors in the nascent industry about the U.S. government’s role in the collapse of pro-crypto banks. Former U.S. Congressman and board member of Signature Bank Barney Frank believes regulators in the country are sending an “anti-crypto message.”

Until the financial institution was closed by regulators, Frank claims it was solvent and operational. In that sense, the former U.S. Congressman added:

I think part of what happened was that regulators wanted to send a very strong anti-crypto message. We became the poster boy because there was no insolvency based on the fundamentals.

Some community members believe the U.S. government is conducting a cover operation on the industry, dubbed “Operation Chokepoint 2.0.” According to this theory, the U.S. is trying to strangle the nascent industry’s financial capabilities by cutting its access to banks in the country.

– confirms that he’s not saying this out of a pro-crypto bias (has always been skeptical)
– says there should be a way for banks to support crypto, and it can be done responsibly
– thinks it’s wrong for banks to be deputized as crypto regulators, should be left to SEC pic.twitter.com/4RLZoAPwMI

— nic carter (@nic__carter) March 15, 2023 

Recent events, and the core of the BA’s demands, seem to confirm that there could be some truth to Operation Chokepoint.