In January, we shared our comment letter to federal regulators requesting an extension of the public comment period associated with the acquisition of Burling Bank by LevelField Financial so that community groups and consumer financial protection organizations can better assess (a) the risks of a crypto finance company acquiring a bank that is important to the small business ecosystem of Chicago’s low- and moderate-income neighborhoods, and (b) the precedent it will set within the financial industry.
The Trump Administration has clearly established themselves as an ally of the crypto industry, and LevelField cites a recent executive order designed to make the United States the “world capital of crypto.” Without sufficient regulatory oversight, the rapid entry of volatile cryptocurrency products into the traditional finance sector will spread risk throughout the financial system. Examples already exist of crypto banks collapsing as a result of volatility in the digital asset sector. The granting of a national bank trust charter to the post-acquisition LevelField Financial entity would set a significant and troubling precedent in this context.
In response to our first letter, LevelField Financial dismissed Woodstock’s concerns out of hand. Rather than address the substance of our letter, LevelField took issue with Woodstock Institute’s characterization of them as a “crypto finance company” — despite acknowledging they will “seek to maintain more than half of [the post-acquisition bank’s] assets in traditional bank products unrelated to cryptocurrency.” Depending on the institution’s definition of “seek,” this means that 49% of the post-acquisition bank’s assets can be directly tied to cryptocurrency (and possibly more if “seek” is not successful).
Given these circumstances, and the public’s right to scrutinize any bank mergers under the federal Community Reinvestment Act, Chicago communities deserve to have the opportunity to assess what impact this acquisition could have on their small businesses.
We sent a second letter in response to LevelField’s letter, laying out in even more detail our concerns about this acquisition, which had not been meaningfully addressed in their letter, and reiterating the need for additional public input.
