Senators Warn SoFi About Posing Consumer Risks

Concerns about SoFi Digital Assets’ nonbank digital asset trading operations and the online bank’s efforts to follow Federal Reserve Board laws were expressed by Democrats on the Senate Banking Committee.

In the letter to Noto, Sherrod, along with Sens. Jack Reed, Chris Van Hollen and Tina Smith, the Federal Reserve noted:

“SoFi is currently engaged in crypto-asset related activities that the Board has not found to be permissible”

In response to SoFi’s acquisition of bank holding firm Gold Pacific Bancorp at the beginning of the year, the Federal Reserve gave it the designation of a financial holding company.

The senators also expressed their concerns in a letter to the Fed vice chair Michael Barr, the acting chair of the Federal Deposit Insurance Corporation, Martin Gruenberg, and the acting comptroller of the currency Michael Hsu.

“Given these significant risks, it is imperative the Fed, FDIC, and OCC ensure that SoFi complies with all consumer financial protection and banking regulations. We commend you for the work that your agencies are doing to protect the public from digital asset risks.”

The senators also dispute SoFi’s selection of available digital content. In investor protection documents, SoFi labeled one of the coins it provides as “a crypto pump-and-dump,” but it continued to provide it. The authors request a response by December 8 to the issues they brought up.

In a Securities and Exchange Commission filing dated November 21 in response to the Democrats’ letter, SoFi emphasized that cryptocurrency remains a non-material component of its business.

“We believe we have been fully compliant with the mandates of our bank license and all applicable laws. We maintain consistent, constructive dialogue with each of our federal and state regulators.”

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