Blockchain Association Intensifies Scrutiny on Crypto Bank Closures with New FOIA Requests

In a bold move to ensure fairness and transparency within the crypto space, the Blockchain Association, a leading cryptocurrency advocacy group, is ramping up its efforts to investigate the recent shutdowns of crypto-friendly banks. Have recent bank closures targeting the crypto industry been driven by genuine financial instability, or is there something more at play? The Blockchain Association is determined to find out.

Seeking Answers Through FOIA: Why Now?

The association has doubled down on its commitment to transparency by filing Freedom of Information Act (FOIA) requests with two key regulatory bodies: the Federal Housing Finance Agency (FHFA) and the New York Department of Financial Services (NYDFS). This action, announced on April 14th, follows their initial requests submitted just over a month prior to the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency.

But what’s fueling this intense scrutiny? The answer lies in the significant events that have shaken the crypto world recently: the seizure of Signature Bank and the collapse of Silvergate Bank. These events have triggered concerns about a potential pattern of ‘de-banking’ cryptocurrency businesses, and the Blockchain Association is determined to get to the bottom of it.

Unpacking the FOIA Requests: What Information is Being Sought?

Let’s delve into the specifics of what the Blockchain Association is hoping to uncover with these FOIA requests:

• Signature Bank Closure: The association is directly questioning the NYDFS, seeking clarity on whether Signature Bank’s closure was genuinely due to insolvency. A crucial question they are asking is whether the closure might have been motivated by an “anti-crypto message,” even if the bank was financially sound. This raises serious concerns about potential regulatory bias against the cryptocurrency industry.
• Silvergate Bank’s Demise: The focus here is on the Federal Home Loan Bank of San Francisco, overseen by the FHFA. The Blockchain Association is investigating whether Silvergate’s failure was influenced by a “politically-motivated decision.” Specifically, they are examining the circumstances surrounding the reported withdrawal of a loan to Silvergate by the Federal Home Loan Bank of San Francisco, questioning if this was an “extraordinary and unusual action” that contributed to the bank’s downfall.

A Timeline of Turmoil: Recapping the Bank Closures

To understand the urgency behind these FOIA requests, it’s important to remember the timeline of recent events:

• Early March: Silvergate’s parent company announced the winding down of operations for Silvergate Bank, a known hub for crypto and tech companies.
• March 10: Silicon Valley Bank, another institution serving the tech sector, experienced a bank run and subsequently collapsed.
• March 12: Federal authorities, including the Treasury and Federal Reserve, took control and shuttered Signature Bank.

These rapid-fire events sent shockwaves through the financial world, particularly within the cryptocurrency ecosystem, prompting questions about the stability and regulatory landscape surrounding crypto-friendly institutions.

Beyond FOIA: The Blockchain Association’s Broader Advocacy

The FOIA requests are just one facet of the Blockchain Association’s multifaceted approach to advocating for the crypto industry. This organization is a significant player in the crypto space, actively working to shape policy and promote a favorable environment for digital assets. Here’s a glimpse into their broader activities:

• Tornado Cash Brief: Just days after announcing the FOIA requests, on April 16th, the Blockchain Association, alongside the DeFi Education Fund, demonstrated its commitment to defending crypto innovation by filing a brief in a U.S. District Court. This brief challenges the sanctioning of Tornado Cash, a privacy-focused crypto mixer, highlighting the association’s willingness to engage in legal battles to protect crypto technologies.
• Industry Powerhouse: The Blockchain Association boasts a membership of around a hundred influential entities, including industry leaders, investors, prominent firms, and innovative projects. This broad base underscores its significant voice and reach within the crypto world.
• Lobbying Influence: The association’s influence extends to the political arena. According to OpenSecrets, a campaign finance data provider, the Blockchain Association spent a substantial $1.9 million lobbying the U.S. government in 2022. This financial commitment reflects their dedication to actively engaging with policymakers and advocating for crypto-friendly regulations.

What’s Next? Implications and the Road Ahead

The Blockchain Association’s FOIA requests are a critical step in seeking transparency and accountability regarding the recent crypto bank closures. The information obtained through these requests could shed light on the motivations behind these actions and potentially reveal any biases or undue influence.

The outcome of these investigations could have significant implications for the future of crypto regulation and the relationship between traditional financial institutions and the digital asset industry. Will these requests lead to greater transparency and fairer treatment for crypto businesses? The crypto community and industry observers will be watching closely as the Blockchain Association continues its pursuit of answers and advocates for a level playing field.

Stay tuned for further updates as this story develops. The fight for clarity and fair regulation in the crypto space is far from over, and the Blockchain Association is clearly positioned to remain at the forefront of this crucial battle.