US senators urge regulators not to punish the entire crypto industry

Tightening regulation of banks serving the crypto industry could ‘punish the entire sector’. This is stated in a letter from Republican senators to the regulators.

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The signatories were Bill Hagerty, Mike Crapo, Tom Tillis and Steve Daines. It is addressed to the Fed Chair Jerome Powell, head of OCC Michael Hsu and acting chair of FDIC Martin Gruenberg.

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“We are especially concerned that regulators’ excessive behavior will inevitably spill over into other legitimate sectors,” the senators said.

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In their view, countering the digital asset sector could exceed regulators’ authority. The authors of the letter compared the situation to the U.S. Department of Justice initiative known as Choke Point. In its implementation, banks were pressured to refrain from dealing with ‘legitimate, but politically unfavourable businesses’.

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“Any industry could potentially fall out of favour depending on the regulator’s ideological viewpoint. … Regulators should not punish an entire industry,” the letter states.

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The senators expect replies from the agency heads by March 24.

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In February, the Fed, the FDIC and the OCC reminded U.S. banks of the potential risks arising from crypto-focused service providers.