- House Republicans have asked federal banking regulators to reverse policies they believe restrict financial innovation in digital assets.
- The letter specifically calls for the Federal Reserve to rescind two supervisory letters that impose “unnecessary supervisory burdens” on banks.
- FOIA disclosures reveal banks were actively discouraged from engaging with cryptocurrency and blockchain technologies.
Republican lawmakers on the U.S. House Financial Services Committee have formally requested that federal banking regulators reverse policies they claim have hindered innovation in the digital asset space. The letter, addressed to leaders of the Federal Reserve, FDIC, and OCC, comes after recent rescissions of interpretive letters by both the OCC and FDIC, with the FDIC’s withdrawal occurring just days before this Congressional request.
The digital assets letter was sent alongside several others to regulators including the SEC, all seeking rollbacks of regulatory actions implemented during the Biden administration. Committee members specifically targeted two Federal Reserve supervisory letters they believe create unnecessary barriers for financial institutions engaged in cryptocurrency and blockchain activities.
Federal Reserve Supervisory Requirements Under Fire
The lawmakers are urging the Federal Reserve to rescind two specific supervisory letters. The first requires Board-supervised banking organizations to notify the Federal Reserve before engaging in digital asset activities. The second, SR 23-8, established a supervisory non-objection process for state member banks working with tokens that use distributed ledger technology.
Committee members argued these requirements have functioned as barriers rather than guardrails, contradicting current efforts to enable financial institutions to participate in the stablecoin ecosystem. They characterized the supervisory non-objection process as a method to “stonewall financial institutions” and restrict their ability to engage with blockchain technology.
FOIA Disclosures Support Republican Concerns
Recent Freedom of Information Act disclosures by the FDIC appear to support these assertions. Documents released following litigation by Coinbase revealed that banks weren’t merely required to seek permission but were actively discouraged from engaging in cryptocurrency-related activities and blockchain transactions, even those not involving cryptocurrency.
The letter from Chairman French Hill and other committee members reflects broader Republican concerns that current regulatory frameworks prevent U.S. financial institutions from competing effectively in the digital asset space, potentially limiting economic opportunities for Americans. Republicans believe these regulatory barriers have impeded financial innovation rather than providing appropriate safeguards.
According to the letter, which can be found here, the committee members view these regulatory approaches as contradicting efforts to enable financial institutions to participate in emerging digital asset technologies.
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