Blockchain asks about “de-banking” crypto enterprises

In the aftermath of the bankruptcies of the Signature, Silicon Valley Bank, and Silvergate banks, the Blockchain Association, a crypto advocacy organization located in the United States, urged financial authorities to disclose information on the possible “de-banking of crypto businesses.”

The Blockchain Association stated in a March 16 notice that it had submitted Freedom of Information Act requests to the Federal Deposit Insurance Corporation, the board of governors of the Federal Reserve System, and the Office of the Comptroller of the Currency for documents and communications that may indicate regulators’ actions “improperly contributed” to the failure of the three banks.

According to the chief executive officer of the Blockchain Association, crypto companies in the United States “should be regarded like any other law-abiding company” with access to bank accounts.

“BA is examining disturbing charges, including account cancellations and reluctance to register new accounts,” the organization stated, adding, “A situation that long-term crypto opponents have mistakenly blamed on the technology.”

For many in the sector, the latest financial crisis started on March 8, when Silvergate’s parent firm announced that the crypto bank would “wind down operations.”

Silicon Valley Bank failed on March 10 following a run on deposits, and on March 12, the Treasury, the Fed, and the FDIC announced the closing of Signature Bank.

In a statement issued at the time, authorities said that the action against Signature was made to “defend the U.S. economy by bolstering public trust in our financial system.”

Former U.S. Congressman and Signature board member Barney Frank allegedly argued, however, that the FDIC was sending a “strong anti-crypto message” by closing the bank, and some politicians are seeking explanations.

According to an FDIC representative, the bidding process for banks interested in purchasing Signature and Silicon Valley Bank has commenced.

Recent claims that the FDIC asked prospective owners of insolvent banks not to promote crypto services may have been part of its “secret marketing process,” according to the source.

According to the FDIC’s resolution guidebook, “an acquirer informs the FDIC of the assets and liabilities of the failing bank that it is ready to assume, as well as what (if any) money will change hands.”

Before its shutdown, Signature was widely regarded as the largest crypto-friendly bank in the United States, serving Coinbase, Paxos Trust, BitGo, and Celsius.

Others in the industry have indicated that the perceived onslaught by federal authorities on banks serving crypto businesses might lead them to choose “shadier” alternatives.