US Senators Ask Bank Regulators to 'Review' SoFi's Crypto Listings

"SoFi’s digital asset activities pose significant risks to both individual investors and safety and soundness," the lawmakers said.

AccessTimeIconNov 21, 2022 at 8:49 p.m. UTC
Updated Nov 22, 2022 at 5:13 p.m. UTC
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U.S. senators Sherrod Brown (D-Ohio), Jack Reed (D-R.I.), Chris Van Holland (D-Md.) and Tina Smith (D-Minn.) wrote open letters to digital finance company SoFi and several bank regulators, asking for a "review" of SoFi's crypto offerings.

The letter to SoFi expressed concerns about the company expanding its crypto business, how it holds customers' cryptos and its listing of dogecoin (DOGE), which a blog post on the company's website cited as an example of a "pump and dump" coin.

The lawmakers asked SoFi to explain how it lists cryptocurrencies for sale, how it addresses customer complaints and how it determines "the appropriate credit, market and operational risk capital requirements for digital asset exposures."

The letter to the company also asked if SoFi lists any cryptocurrencies that are securities, and, if so, whether it's licensed to offer securities.

A separate letter addressed to Federal Reserve Vice Chair for Supervision Michael Barr, Acting Federal Deposit Insurance Corporation Chair Martin Gruenberg and Acting Comptroller of the Currency Michael Hsu said SoFi "committed not to 'expand [its] impermissible activities'" but that the company "has apparently expanded its digital asset retail operations."

"SoFi’s 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," the letter said. "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."

In a statement, a SoFi spokesperson said the company allows its members to buy and sell cryptocurrencies but does not provide any other type of crypto-related financing activity.

"SoFi takes our regulatory and compliance commitments seriously, including our non-bank operations within the digital assets space," the spokesperson said. "We believe we have been fully compliant with the mandates of our bank license and all applicable laws. Additionally, we maintain consistent, constructive dialogue with each of our regulators. Cryptocurrency remains a non-material component of our business. We look forward to sharing the requested information with the senators in a timely fashion."

The spokesperson also said SoFi had no exposure to FTX, the FTT token, Alameda Research or Genesis Global Trading. (Genesis shares a parent company with CoinDesk, Digital Currency Group.)


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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

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