Whistleblowers Accuse FDIC of Impeding Crypto Companies' Bank Access��������������������������������������������������������������

According to the top Republican on the Senate Banking Committee, federal regulators may be going too far by discouraging banks from working with crypto companies�

In a letter sent Tuesday to acting chairman Martin Gruenberg of the Federal Deposit Insurance Corporation, Sen� Pat Toomey of Pennsylvania reported that whistleblowers have complained that the FDIC is "improperly taking actions to prevent banks from dealing with lawful cryptocurrency companies� "

At the direction of officials at the agency's Washington, D�C� headquarters, Toomey said that affected parties had come forward to say that their banks had received letters from regional FDIC offices. The request was to refrain from expanding relationships with cryptorelated companies without providing any legal basis for doing so� "

The FDIC is one of the nation's most important banking regulators, as it ensures retail customer deposits and supervises banks to establish their safety and soundness� "According to longstanding legal authority, the FDIC is ensuring that banks engaging in cryptorelated activities are doing so safely and securely to protect consumers," an agency spokesperson said in a statement�

According to the statement, FDIC officials may request that institutions delay or refrain from initiating or expanding crypto-related activities until supervisory feedback is considered� These actions are necessary and appropriate given the risks readily apparent in crypto-asset markets� "

According to the FDIC, all insured banks that deal with crypto companies or intend to do so should notify the agency in April and express concern that "crypto assets and crypto-related activities are rapidly evolving, and given the limited experience with these new activities, the risks of this area are poorly understood� "

In July, the FDIC issued a notice to the public stating that FDIC insurance does not protect consumers from the failure of non-banks like crypto companies that misrepresented their products as eligible for FDIC coverage� A broad decline in the prices of digital assets such as bitcoin BTCUSD and ether ETHUSD - caused many customers to lose tens of thousands of dollars�

Toomey's letter to the FDIC chief suggests that the FDIC may have overreached in its efforts to protect banks from failures of crypto-related companies� He described one whistleblower report that FDIC headquarters officials urged regional offices to downgrade their classification of one bank's loan to a crypto-related company�

"It is my understanding that it is highly atypical for FDIC headquarters personnel to be involved in reviewing an individual loan," Toomey wrote� "If reports are true that there was nothing unusual about this loan (other than that it was to a crypto-related company) and that the loan amount was too small to affect the bank's supervisory rating even if it had to write off the entire loan, this episode raises important questions� "