(Reuters) – U.S. Senators Elizabeth Warren and Tina Smith are demanding an accounting from the Federal Reserve and other U.S. financial regulators of banks’ cryptocurrency activity and ties to the industry following the implosion of crypto exchange FTX.
“While the banking system has so far been relatively unscathed by the latest crypto crash, FTX’s collapse shows that crypto may be more integrated into the banking system than regulators are aware,” the lawmakers wrote to the chiefs of the Fed, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency in letters dated Wednesday and released by Warren’s office on Thursday.
“We write to express concern … and to inquire about how your agency assesses the risks to banks and the banking system associated with those relationships,” wrote the senators, both Democrats on the Senate Banking Committee.
The letters asked for details on oversight of banks’ cryptocurrency trading and loans to crypto firms, and asked if regulators plan to conduct a review of crypto firms’ relationships with banks. They gave regulators two weeks to respond to their requests.
Lawmakers have launched inquiries into the cryptocurrency industry following the collapse of Bahamas-based FTX, which filed for bankruptcy last month after the disappearance of at least $1 billion of customer funds.
(Reporting by Ann Saphir; editing by Jonathan Oatis)