Lawmakers urge FDIC to clarify digital asset regulations amid debanking concerns

The House Financial Services Committee Chairman, French Hill, along with Subcommittee Chairmen Dan Meuser, Andy Barr, and Bryan Steil, have addressed a letter to FDIC Acting Chairman Travis Hill. The correspondence seeks clarity on the FDIC's regulatory and supervisory approach concerning digital asset activities of regulated financial institutions. The lawmakers express concerns about alleged pressure from Biden-Harris Administration regulators on banks to deny services to digital asset firms, a practice referred to as "debanking."

In their letter, the legislators propose five recommendations aimed at clarifying regulations around digital assets:

1. Written, Public Guidance

2. Concrete Rationale for Account Closures

3. Eliminate “Reputational Risk”

4. Balancing Test for Regulations

5. Uniform Application

The letter emphasizes the need for transparency and accountability in FDIC operations related to digital assets. It references a recent hearing titled “Operation Choke Point 2.0: The Biden Administration’s Efforts to Put Crypto in the Crosshairs,” where concerns were raised about regulatory pressures on the digital asset ecosystem.

The lawmakers request information on potential actions the FDIC can undertake independently of Congress and seek clarification on which recommendations might require legislative action.

They state: "We are writing to better understand the plan for the Federal Deposit Insurance Corporation’s (FDIC) regulatory and supervisory work related to the digital asset activities of regulated financial institutions." They also express gratitude for documents released by Acting Chairman Hill related to "pause letters," viewing it as a commitment to transparency.

The letter concludes with an appeal for cooperation between Congress and the FDIC in addressing these issues.