The members of the committee, who appear to have been motivated to be vigilant by the FTX scandal, do not see any evidence that SoFi Digital Assets are developing in the manner that the Fed ordered.
On November 21, Sherrod Brown, chairman of the United States Senate Banking Committee, and three other Democratic members of the committee wrote letters to federal officials and Anthony Noto, president of SoFi Technology.They expressed concern regarding the nonbank digital asset trading activities conducted through SoFi Digital Assets and the online bank’s efforts to comply with Federal Reserve Board requirements.
Sherrod and Senators wrote a letter to Noto.The Federal Reserve 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 (FHC), as noted by Jack Reed, Chris Van Hollen, and Tina Smith.After SoFi bought Gold Pacific Bancorp, a bank holding company, at the start of the year, the Federal Reserve gave it the status of a financial holding company.
The senators wrote, despite the fact that the Fed gave SoFi two years to legalize or divest SoFi Digital Assets,
“We are concerned that SoFi’s continued activities involving illegal digital assets show that it does not take its regulatory commitments seriously or fulfill its obligations,”
However, SoFi “announced a new service allowing customers of its national bank to invest part of every direct deposit into digital assets without fees,” despite being prohibited from expanding its prohibited activities or conducting crypto transactions in its national bank subsidiary.
Additionally, “SoFi’s facilitation of customer digital asset trading and holding digital assets on balance sheet raises questions about the appropriate capital requirements calculation.”They advise:
“If crypto-related exposures at SoFi Digital Assets eventually necessitate its parent BHC or affiliated national bank seeking emergency liquidity or other financial assistance from the Federal Reserve or FDIC [Federal Deposit Insurance Corporation], taxpayers could be held liable.”
Last but not least, the senators question SoFi’s selection of available digital assets.In investor protection materials, SoFi described one of its offerings as “a crypto pump-and-dump,” but it continued to offer it.By Dec. 8, the authors require a response to the issues they raised.
In addition, the senators addressed their concerns in a letter to Michael Barr, vice chair of the Fed, Martin Gruenberg, acting chair of the Federal Deposit Insurance Corporation, and Michael Hsu, acting comptroller of the currency.They wrote that the Fed, FDIC, and OCC (Office of the Comptroller of the Currency) must make certain that SoFi complies with all banking and consumer financial protection regulations.