Rep. Tom Emmer: Is the FDIC 'Weaponizing' Market Chaos to Kill Crypto?

U.S. House Majority Whip Rep. Tom Emmer is asking whether the Federal Deposit Insurance Corporation (FDIC) has weaponized its authority in an attempt to “purge legal digital asset entities and opportunities from the United States.”

Emmer on Wednesday sent a letter to FDIC Chairman Martin Gruenberg citing recent actions by the agency and accusations that it is trying to kill crypto.

Emmer asked the FDIC if it had instructed banks not to provide crypto firms banking services or if it explicitly or implicitly told banks they would face harsher supervision if they took on new crypto clients. Emmer also demanded to know what guidance the FDIC provided to financial institutions to help manage the risk of rising rates.

“If this is the case, these actions to weaponize recent instability in the banking sector—catalyzed by catastrophic government spending and unprecedented interest rate hikes—are deeply inappropriate and could lead to broader financial instability,” Emmer wrote, citing recent comments by former Congressman Barney Franks, co-author of the Dodd-Frank Act.

On Monday, Franks, a Signature Bank board member, said in an interview with CNBC that regulators targeted the bank to send an “anti-crypto message.”

In the letter, Emmer accused regulators of causing “regulatory statement-driven fear,” which led to a bank run on banks that provide legal crypto firms access to financial services. Emmer pointed to a January 3, 2023 statement by the FDIC, Federal Reserve, and Office of the Comptroller of the Currency, discouraging banks from dealing in crypto.

Emmer requested that the FDIC respond to his questions by 5:00 pm on March 24, 2023.

Emmer is just one of the voices in Washington, D.C., calling for more discussion of cryptocurrency in the United States. Lawmakers in both chambers of Congress, including Massachusetts Senator Elizabeth Warren, have pressed regulators to deal with the industry with a firmer hand.

Last week, California financial regulators shut down Silicon Valley Bank on Friday, turning control of the tech startup-friendly bank to the FDIC. On Sunday, New York regulators took control of Signature Bank, taking many in the tech and cryptocurrency sectors by surprise, coming only weeks after crypto-friendly Silvergate bank announced winding down operations.