tl;dr
The US Fed has issued a cease and desist order against United Texas Bank due to concerns about its risk management and crypto dealings. Ripple CTO David Schwartz criticizes this move as indirect regulation and calls for direct action against crypto companies instead of targeting their banking partne...
The US Fed has issued a cease and desist order against United Texas Bank due to concerns about its risk management and crypto dealings. Ripple CTO David Schwartz criticizes this move as indirect regulation and calls for direct action against crypto companies instead of targeting their banking partners. The Fed's order highlights deficiencies in the bank's handling of virtual currency customers and anti-money laundering compliance. Schwartz warns that penalizing banks involved with crypto could harm the industry and limit its access to financial services.
This action against United Texas Bank follows a similar move against Customers Bancorp, leading to speculation that the Fed is implementing "Chokepoint 2.0" to stifle the crypto industry.
The U.S. Federal Reserve has ordered United Texas Bank to halt operations, citing concerns about its risk management and crypto dealings. This move has sparked a debate about the government’s approach to regulating the crypto industry, with Ripple CTO David Schwartz criticizing what he calls “indirect regulation.” The Fed’s order highlights specific deficiencies in the bank’s handling of virtual currency customers and anti-money laundering compliance. Schwartz argues that if the government has issues with crypto companies, it should address them directly rather than targeting their banking partners.
In a September 4 order, the Fed detailed concerns about United Texas Bank’s corporate governance and risk management, particularly regarding foreign correspondent banking and virtual currency customers. The examination identified significant deficiencies related to foreign correspondent banking and virtual currency customers, specifically risk management and compliance with applicable laws, rules, and regulations relating to anti-money laundering including the Bank Secrecy Act.
Schwartz criticized the government’s tactics, calling for the courts to intervene. He argued that if the government has concerns about crypto companies, it should address them directly rather than penalizing their banking partners. Schwartz also warned that targeting banks like United Texas Bank could have a chilling effect on the crypto industry, limiting its access to essential financial services. He emphasized that when a bank faces consequences for its crypto ties, it’s the crypto companies themselves that ultimately pay the price.