Several US senators have penned open letters to SoFi and several bank regulators, asking for a “review” of SoFi’s crypto products.
Written by US senators Sherrod Brown (D-OH), Jack Reed (D-RI), Chris Van Holland (D-MD) and Tina Smith (D-MN), two separate letters were sent out – one to SoFi, and the other to US bank regulators.
The letter to SoFi is concerned with how SoFi is expanding its business, how it conducts its holdings, and its listing of dogecoin (DOGE) – famous for being an example of a “pump and dump” coin, highlighted in a blog post on SoFi’s website.
“SoFi’s digital asset activities pose significant risks to both individual investors and safety and soundness,” the lawmakers wrote in the letter.
The lawmakers continued on to ask SoFi for an explanation of how it conducts business – including how it lists cryptocurrencies for sale, how customer complaints are handled, and how the firm decides on “the appropriate credit, market and operational risk capital requirements for digital asset exposures.”
Additionally, the senators asked for SoFi to list any cryptocurrencies that are regarded as securities, and if such currencies are so, to also include whether that currency is licensed to offer securities.
The other letter, sent 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, writes that SoFi is “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, pointing out to recent events in crypto that have raised concerns about its credibility amongst the general public.
The letter continues, “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.”
A SoFi spokesperson said, via statement, that the company allows its members to buy and sell crypto, 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 licence and all applicable laws. Additionally, we maintain consistent, constructive dialogue with each of our regulators.”
The SoFi spokesperson, in reference to getting the request for review mentions that they are “[… looking] forward to sharing the requested information with the senators in a timely fashion.
In regards to being affected by the most recent crypto meltdown – the spokesperson highlights that SoFi had no exposure to the FTT token, FTX.com, nor Alameda Research.
