In letters addressed to the CEO of SoFi and banking regulators, four Democrats on the Senate Banking Committee voiced their concern over SoFi’s use of crypto assets given the recent FTX meltdown.
In a letter to the Federal Reserve’s vice chair for supervision and the acting heads of the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC), Sens. Sherrod Brown of Ohio, Jack Reed of Rhode Island, Chris Van Hollen of Maryland, and Tina Smith of Minnesota asked regulators to monitor SoFi’s digital-asset activities.
“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 lawmakers wrote. “In the event that 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.”
After the acquisition of Golden Pacific Bancorp, the Fed gave SoFi two years to divest from SoFi Digital Assets — a nonbank subsidiary that allows investors to buy and sell digital assets — or conform the subsidiary’s impermissible digital-asset activities to the law, the senators wrote.
But within two months of the regulatory approval, SoFi introduced a new service where the bank’s national customers could invest part of every direct deposit into digital assets without any additional fee, calling it “the latest expansion of SoFi’s offerings to make it simpler to get started with cryptocurrency investing,” the senators wrote.
SoFi highlighted at least one token — dogecoin — in its own investor protection material as a “crypto pump-and-dump” and warns customers of the high risk involved in it, the lawmakers wrote.
The senators are asking SoFi to respond by Dec. 8.
"SoFi takes our regulatory and compliance commitments seriously, including our non-bank operations within the digital assets space," a SoFi spokesperson said in a statement to CNBC. "We believe we have been fully compliant with the mandates of our bank license and all applicable laws. Additionally, we maintain consistent, constructive dialogue with each of our regulators. Cryptocurrency remains a non-material component of our business. We look forward to sharing the requested information with the Senators in a timely fashion."
In a separate letter, lawmakers questioned SoFi CEO Anthony Noto about the company’s procedures and policies related to digital assets and customer complaints. They also asked about SoFi’s market and operational risk capital requirements for exposures to digital assets; whether the company offers any securities for purchase or sale; and the company’s adherence to Fed and OCC restrictions on engaging in digital-asset activities within the bank.
“We are concerned that SoFi’s continued impermissible digital asset activities demonstrate a failure to take seriously its regulatory commitments and to adhere to its obligations,” the lawmakers wrote to Noto.
A SoFi spokesperson confirmed the company has "no exposure" to several firms experiencing either bankruptcy or disruption, including FTX or its token FTT, FTX's affiliated hedge fund Alameda Research or cryptocurrency firm Genesis, Law360 reported.
Spokespeople for the Fed, the FDIC and the OCC declined to comment to Law360 regarding Monday's letters.