In a letter to the FDIC Rep. Tom Emmer (R-MN) blamed government organizations for creating the market fear that led to tech-bank collapses, and raised concerns over a purging of legal digital asset activity in the U.S.
On March 15, Tom Emmer, the Republican Congressman for Minnesota and House Majority Whip, wrote a letter to the Chairman of the Federal Deposit Insurance Corporation (FDIC), Mark Gruenberg, voicing his concerns about the organization’s role in the closures of tech-friendly banks.
Today, I sent a letter to FDIC Chairman Gruenberg regarding reports that the FDIC is weaponizing recent instability in the banking sector to purge legal crypto activity from the U.S. 👇 pic.twitter.com/fDmaA0XGWv
— Tom Emmer (@GOPMajorityWhip) March 15, 2023
“Recent reports indicate that Federal financial regulators have effectively weaponized their authorities over the last several months to purge digital asset entities and opportunities from the United States,” said Emmer, who went on to suggest that the recent closures of digital asset and tech-centred banks—including Silvergate, Signature Bank (NASDAQ: SBNY), and Silicon Valley Bank—were the result of a targeted regulatory effort to, “single out financial institutions and send a message to get people away from crypto.”
The FDIC was set up after the Great Depression to insure deposits in U.S. banks in the event of a bank failure or run, and the most recent bank to seek assistance from the organization is Silicon Valley Bank, which collapsed last week—State financial regulator the California Department of Financial Protection shut the bank down, finding “inadequate liquidity and insolvency” after an attempted bank run.
In his March 15 letter to the FDIC, Emmer attributed this and other tech-bank closures to a combination of “actions to weaponize recent instability” and “catastrophic government spending and unprecedented interest rate hikes.” He claimed this government—led policy of regulatory statement—driven market fear was driving the mass withdrawals and bank runs.
Emmer is a prominent crypto-advocate, dubbed by the Minnesota Reformer the “crypto king of Congress,” and has previously criticized regulatory authority and deflected blame from the digital asset space. After the FTX collapse, he was vocal in his critique of the SEC’s handling of the situation, in particular, SEC Chair Gary Gensler, who he described as “very arrogant.” He suggested at the time that the collapse was a classic case of fraud and manipulation and that the problem lay in the platform being centralized, thus easier for its “crook” CEO, Sam Bankman-Fried, to abuse.
In his latest defense of the digital asset industry, Emmer cited the collapse of FTX as a warning against forcing American consumers to go offshore and said the fallout from the exchange’s collapse is an example of what can happen “when we don’t compete to keep crypto firms onshore.”
Emmer concluded his letter with three specific questions for the FDIC to be answered by March 24:
- Had the FDIC instructed banks to not provide crypto firms banking services?
- Had it communicated to banks that their supervision will be “more onerous” if they take on or maintain digital asset clients?
- And pointing again to interest rate hikes being the reason for the bank closures, rather than the volatility of digital assets, he asked what guidance the FDIC provided to financial institutions to help them manage and mitigate the risks of rising rates?
From the tone of the letter, it’s likely Emmer has already made up his mind and that these questions might be of the rhetorical variety, as much as they are queries from which he expects a satisfying response.
This is suggested by one of his parting blows, which accused the administration and its regulators of choking-off digital assets from the U.S. financial system in a “lazy and destructive regulatory strategy that is stagnating innovation and subjecting American users of digital assets to less sophisticated regulatory jurisdictions.”
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