Senate Banking Committee Democrats caution SoFi about deadlines
Zach Anderson Nov 22, 2022 04:52
After purchasing Gold Pacific Bancorp, SoFi was awarded the status of bank holding company. Customers of SoFi's national bank may invest a portion of their direct deposits in digital assets without incurring fees. In investor protection documents, SoFi characterized one of the currencies it provides as "a crypto pump-and-dump" The writers seek an answer to these matters by December 8.
Sherrod Brown, who chairs the United States Senate Banking Committee, and three other Democratic members of the committee sent letters on November 21 to a number of government authorities as well as to Anthony Noto, the president of SoFi Technology. Noto was also copied on the letters. Brown chairs the committee.
They were concerned about the efforts that the online bank was making to satisfy the standards that were laid out by the Federal Reserve Board, as well as the trading of nonbank digital assets that was being conducted by SoFi Digital Assets. Specifically, they were concerned about the trading of nonbank digital assets by SoFi Digital Assets.
Sherrod, along with Senators Jack Reed, Chris Van Hollen, and Tina Smith, mention in their letter to Noto that the Federal Reserve has stated that SoFi is "currently engaged in crypto-asset related activities that the Board has not found to be permissible" for a bank holding company (BHC) or financial holding company. This information is included in the letter that Sherrod sends to Noto. This assertion is made in relation to the reality that SoFi is "now participating in actions linked to crypto assets that the Board has not deemed to be acceptable. "
After SoFi completed its purchase of Gold Pacific Bancorp, a bank holding company, at the beginning of this year, the Federal Reserve acknowledged SoFi as a suitable candidate for the post of financial holding company.
However, the company did "announce a new service that lets customers of its national bank invest a portion of every direct deposit into digital assets for free." Although SoFi was not allowed to expand its illegal activities or conduct cryptocurrency transactions within its national bank subsidiary, the company did "announce a new service that lets customers of its national bank invest a portion of every direct deposit into digital assets for free."
In addition to this, "SoFi's facilitation of customer digital asset trading and holding digital assets on the balance sheet raises questions about the appropriate calculation of capital requirements." [Citation needed] [Further citation is required]
In conclusion, the senators have a few questions and concerns concerning the digital assets that are made available by SoFi.
In the investor protection documents that it provides, SoFi classified one of the cryptocurrencies it distributes as "a crypto pump-and-dump" Despite this description, the business did not stop providing the cryptocurrency to its customers.
A response to the issues mentioned above is required by the authors by December 8 at the latest. In addition, the senators expressed their concerns once again in a letter that was sent to Michael Barr, who is the vice chair of the Federal Reserve; Martin Gruenberg, who is the acting head of the Federal Deposit Insurance Corporation; and Michael Hsu, who is the acting comptroller of the currency.
Image source: Shutterstock