A group of Democratic senators is urging federal regulators to review the crypto trading activities of fintech bank SoFi.
In a letter to Michael Barr, vice chair for supervision at the Federal Reserve; Martin Gruenberg, acting chair at the Federal Deposit Insurance Corp. (FDIC); and Michael Hsu, acting comptroller, the lawmakers highlighted the risk to consumers when banks trade volatile crypto assets. They also warned that SoFis crypto trading might be in violation of regulatory requirements.
SoFis digital asset activities pose significant risks to both individual investors and safety and soundness. As we saw with the crypto meltdown this summer, where crypto-assets lost over $1 trillion in value in a matter of weeks, contagion in the banking system was limited because of regulatory guardrails.4 In the event of crypto-related exposures at SoFi Digital Assets ultimately require its parent company, bank holding company, or affiliated national bank to seek emergency liquidity or other financial assistance from the Federal Reserve or FDIC, taxpayers may be on the hook, the senators wrote
The letter was authored by U.S. Sens. Sherrod Brown (D-OH), chair of the Senate Committee on Banking, Housing, and Urban Affairs, along with committee members Sens. Jack Reed (D-RI), Chris Van Hollen (D-MD), and Tina Smith (D-MN).
Given these significant risks, it is imperative the Fed, FDIC, and OCC ensure that SoFi complies with all consumer financial protection and banking regulations. We commend you for the work that your agencies are doing to protect the public from digital asset risks, the lawmakers wrote.
In addition, the senators sent a letter to SoFi CEO Anthony Noto, urging the bank to conform to U.S. banking law.
We are concerned that SoFis continued impermissible digital asset activities demonstrate a failure to take seriously its regulatory commitments and to adhere to its obligations, they wrote.
They asked Noto to reply to a series of questions on the matter by Dec. 8.