Today I wonder if SoFi will lie about the conflicts with the Bank of London and Kuwait?
On Wed, Nov 23, 2022, 5:04 PM Gunnar Larson <[email protected]> wrote: > > https://drive.google.com/file/d/1BTRDAHKkx1IO3Ih07O-qY2oU-0GciYeP/view?usp=drivesdk > > November 21, 2022 > Mr. Anthony Noto > Chief Executive Officer > SoFi Technologies, Inc. > 234 1st Street > San Francisco, CA 94105 > Dear Mr. Noto: > We write to inquire about SoFi Technologies, Inc.’s (SoFi) progress to > conform its digital asset > trading activities to U.S. banking law. Over the past year, several > meltdowns in the crypto > market have wiped out trillions in value, including another huge crash > last week. We are > concerned that SoFi’s continued nonbank digital asset trading activities > pose risks to consumers > and safety and soundness risks to your institution. > In February 2022, SoFi completed its acquisition of Golden Pacific > Bancorp, a bank holding > company (BHC) and its subsidiary Golden Pacific Bank, a national bank.1 > As part of that > transaction, SoFi received approval from the Federal Reserve to become a > BHC and elected to be > treated as a financial holding company (FHC) subject to consolidated > supervision by the Federal > Reserve.2 Additionally, SoFi received a conditional approval from the > Office of the Comptroller > of the Currency (OCC) to create a full-service national bank subsidiary > insured by the Federal > Deposit Insurance Corporation (FDIC).3 > Following its conversion to a BHC, SoFi continues to operate a nonbank > subsidiary called SoFi > Digital Assets, an exchange for retail investors to buy and sell digital > assets. In its letter dated > January 18, 2022, granting approval, the Federal Reserve noted that “SoFi > is currently engaged > in crypto-asset related activities that the Board has not found to be > permissible” for a BHC or an > FHC. SoFi’s most recent annual report states that these impermissible > activities are conducted > by SoFi Digital Assets.4 > > Under the January 18, 2022 letter, SoFi has two years to either divest > SoFi Digital Assets or > conform its activities to the law, with the potential for up to three > one-year extensions in the Federal Reserve’s discretion. During this > conformance period, SoFi has committed not to > “expand [its] impermissible activities,” except as specifically authorized > by law. Specifically, > SoFi has committed not to increase the “types of products and services > offered” and the > “established risk limits for total customer digital assets maintained in > wallets that are accessible > online . . . or held on balance sheet.” In addition, the OCC’s conditional > approval restricts SoFi’s > national bank subsidiary from conducting “any crypto-asset activities or > services” without prior > regulatory approval. > 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. > First, SoFi’s apparent expansion of its digital asset services raises > questions about progress > towards meeting conformance commitments by January 2024. Two months after > receiving > approval to become a BHC, SoFi announced a new service allowing customers > of its national > bank to invest part of every direct deposit into digital assets with no > fees. The company publicly > billed this service as “the latest expansion of SoFi’s offerings to make > it simpler to get started > with cryptocurrency investing.”5 > > Second, SoFi’s facilitation of customer digital asset trading and holding > digital assets on-balance > sheet raises questions about the appropriate calculation of capital > requirements. Under current > capital rules, the capital treatment of these digital assets follows their > accounting treatment rather > than capital standards tailored to the risks of this particular asset > class. While digital assets can > pose the same risks as traditional financial assets, the recent market > crash has highlighted > concerning credit, market, liquidity, and operational risks associated > with digital assets. > Appropriate capital treatment is important because taxpayers could be on > the hook if crypto- > related exposures at SoFi Digital Assets ultimately require its parent BHC > or affiliated national > bank to seek emergency liquidity or other financial assistance from the > Federal Reserve or FDIC. > Third, SoFi’s standards for choosing which digital assets to offer its > customers for trading raises > investor protection concerns. According to criteria listed on SoFi’s > website, the company’s > policy is to list assets that “align with SoFi’s values, such as promoting > financial inclusion and > economic freedom.”6 > But SoFi’s own investor protection materials posted on its website warn > customers that at least one token listed on SoFi Digital Assets is “a > crypto pump-and-dump” > hazard with “no special use case or features” and that “[it] might be > among the most high-risk > endeavors an investor can take.”7 > At the time SoFi issued this warning, the company had been > offering this asset for several months and still offers it today. > Facilitating retail sales of an > investment product that SoFi has identified as a fraud and susceptible to > market manipulation is > incompatible with fundamental principles of investor protection and safety > and soundness. > > Accordingly, we ask that you reply to the following questions no later > than December 8, 2022: > 1. Describe SoFi’s policies and procedures for: > a. Determining which digital assets to offer and sell through SoFi Digital > Assets. > b. Ensuring that digital asset purchases and sales are conducted in > compliance with > applicable laws and regulations. > c. Identifying any potential conflicts of interest and how those conflicts > should be > addressed. > d. Monitoring customer complaints and their resolution. > 2. How has SoFi determined the appropriate credit, market, and operational > risk capital > requirements for digital asset exposures, including customer digital > assets and digital > assets held on SoFi’s balance sheet? > 3. Does SoFi Digital Assets offer any securities for purchase or sale? If > so, how do SoFi > Digital Asset’s existing registrations and licenses provide authorization > to operate a > platform for buying and selling those securities? > 4. Describe SoFi’s plan to conform its digital asset trading activities to > the BHC Act and > Regulation Y by January 2024. How have the policies and offerings > described in > questions 1-3 changed, if at all, since January 18, 2022? How does its > service allowing > customers to invest part of their direct deposit in digital assets meet > SoFi’s conformance > commitments to the Federal Reserve and the OCC’s restrictions on engaging > in digital > asset activities within the national bank? > Thank you for your attention and prompt response to these questions. > Sincerely, > Sherrod Brown Jack Reed > United States Senator United States Senator > Chris Van Hollen Tina Smith > United States Senator United States Senator > > >
