Republican lawmakers on the House Financial Services Committee last week offered five recommendations to the FDIC on how to “clarify” digital asset regulation and prevent alleged debanking. The recommendations include eliminating reputational risk as a supervisory factor and subjecting all supervisory guidance to external, periodic review.
In a letter to Acting FDIC Chairman Travis Hill, committee Chairman French Hill (R-Ark.) along with subcommittee chairmen Dan Meuser (R-Pa.), Andy Barr (R-Ky.) and Bryan Stiel (R-Wis.) alleged that Biden administration regulators pressured banks to deny service to digital asset firms. “We are concerned that if we do not make the necessary changes, future administrations will continue to operate under the Choke Point playbook using the supervisory process to debank disfavored industries,” they said.
Their five recommendations are:
- Require banking supervisory guidance to be written and publicly disclosed (with limited redactions), ending informal “verbal-only” directives.
- Respecting Bank Secrecy Act requirements, explore ways for financial institutions to provide a clear explanation to customers when closing their accounts to ensure accountability.
- Prohibit the use of reputational risk as a supervisory factor and clarify and reform the use — including consideration of removing as a factor — of “management” from CAMELS assessment to prevent abuse or discrimination.
- Subject supervisory guidance to an external, periodic review that weighs regulatory benefits against the effects on law-abiding customers’ banking access.
- Ensure all supervisory guidance and rules apply equally to all institutions, barring preferential or punitive case-by-case treatment.
“While we understand that there is still a need for congressional action to help clarify regulations surrounding digital assets, we hope that you will look at these recommendations and implement them appropriately,” the lawmakers said.
