Investigating Allegations of Debanking: Blockchain Association’s FOI Request

According to reports, the Blockchain Association has made a further request under the Freedom of Information Act (FOIA) to investigate allegations of de banking that may have improperly led to the bankruptcy of Signature, Silicon Valley, and Silvergate. The association stated in a statement that it has submitted information requests to the Federal Housing Finance Agency (FHFA) and the New York Department of Financial Services (NYDFS).

The Blockchain Association has requested an investigation into encrypted and friendly bank information

The Blockchain Association has recently made a further request under the Freedom of Information Act (FOIA) to investigate allegations of de-banking that may have improperly led to the bankruptcy of Signature, Silicon Valley, and Silvergate. The association stated in a statement that it has submitted information requests to the Federal Housing Finance Agency (FHFA) and the New York Department of Financial Services (NYDFS).

What is Debanking?

Debanking refers to the practice of banks denying access to financial services to customers within a particular industry or sector. This is often done due to regulatory concerns, but can also be due to the perceived risk associated with the sector. Unfortunately, debanking has been a common occurrence within the cryptocurrency industry. In fact, a report by the Cambridge Centre for Alternative Finance found that more than 100 cryptocurrency businesses had lost their banking relationships between 2015 and 2018.

Alleged Improper Debanking and Bankruptcy of Signature, Silicon Valley, and Silvergate

Signature Bank, Silicon Valley Bank, and Silvergate are banks that have been providing financial services to the cryptocurrency industry. However, it has been alleged that these banks have improperly debanked some of their cryptocurrency clients, which led to their bankruptcy.
The Blockchain Association believes that if these allegations are true, it would be a violation of the law. Hence, they have made a further request under the Freedom of Information Act to investigate the matter. The association is seeking information from the Federal Housing Finance Agency and the New York Department of Financial Services to help them build their case.

Why Does Debanking Matter to the Blockchain Industry?

The cryptocurrency industry has always faced challenges when it comes to accessing financial services. Cryptocurrency exchanges are often seen as high-risk businesses due to the perceived association with money laundering and terrorist financing. As a result, many banks have shied away from providing services to the industry.
Debanking a business also has significant consequences. It can lead to the loss of banking relationships, which can make it challenging for businesses to conduct their operations. Losing access to banking services could mean that these businesses are unable to pay their employees or overheads, which could ultimately lead to bankruptcy.

The Role of the Blockchain Association

The Blockchain Association is a non-profit organization that represents the blockchain industry in the United States. It aims to bring together industry leaders, regulators, and policymakers to develop a regulatory framework that supports innovation while safeguarding consumers and investors.
The association believes that debanking is a significant issue that needs to be addressed. It is seeking to use the Freedom of Information Act to get a better understanding of the extent of debanking that has occurred within the industry. By doing so, it hopes to build a case that will highlight the impact of debanking on the industry and its clients. Ultimately, the association aims to work with regulators and policymakers to create a regulatory framework that offers greater certainty for businesses operating within the blockchain industry.

Conclusion

The blockchain industry is constantly evolving, and it faces several regulatory and operational challenges. One of the most significant challenges is gaining access to financial services, which is often denied due to the perceived high risk. Being debanked can have significant consequences, including loss of business, lost jobs, and bankruptcy. The Blockchain Association is taking steps to investigate allegations of improper debanking that led to the bankruptcy of Signature, Silicon Valley, and Silvergate. Hopefully, their efforts will bring to light the impact of debanking and encourage regulators and policymakers to create a more supportive regulatory framework.

FAQs

1. What is the Freedom of Information Act?

The Freedom of Information Act (FOIA) is a federal law that grants members of the public the right to access information controlled by the government.

2. Why do banks de-bank cryptocurrency businesses?

Banks often de-bank cryptocurrency businesses due to regulatory concerns and perceived risk associated with the sector.

3. What does the Blockchain Association do?

The Blockchain Association is a non-profit organization that represents the blockchain industry in the United States. It works with industry leaders, policymakers, and regulators to develop a regulatory framework that supports innovation while ensuring consumer protection.