It has always been difficult for crypto companies to gain access to the traditional banking system. Despite this, a few boutique banks continued to serve crypto startups. This has led to the rise of stablecoins like Tether, which offer fiat payments when traditional banking options are not available. In recent weeks, the US President Biden administration has stepped up efforts to isolate the crypto space from the traditional banking system. This plan; The Biden administration includes multiple agencies such as members of Congress, the Fed, the FDIC, the OCC, and the DoJ. Analyst Rudy Fares looked at how the U.S. crypto ban might already be in place, examining events according to the timeline. Here are the details…
Here is the timeline for cryptocurrency steps in the US
US senators focus on banks
On December 6, Senators Elizabeth Warren, John Kennedy, and Roger Marshall sent a letter to crypto-friendly bank Silvergate. The letter criticized the bank for providing services to FTX and Alameda Research and failing to report suspicious activity associated with these customers.
Signature Bank announces intention to halve deposits
On December 7, Signature Bank, one of the most active banks serving crypto clients, announced its intention to halve deposits allocated to crypto clients. This means that the bank will give customers their money back and then close their accounts. The bank will also exit the stablecoin business, which was $23 billion at its peak and is now down to $10 billion.
Joint cryptocurrency statement from Fed, FDIC and OCC
On January 3, the Fed, FDIC, and OCC issued a joint statement on the risks of banks interested in crypto. While the statement did not explicitly prohibit banks’ ability to hold crypto or do business with crypto customers, it certainly discouraged this space on a “security and soundness” basis.
Banks are closing customers on cryptocurrencies
On January 9, Metropolitan Commercial Bank, one of the few banks serving crypto clients, announced that it is completely shutting down its crypto-assets division.
Silvergate’s stock drops
Also on January 9, Silvergate stock fell as low as $11.55 amid fears of a “bank run” and bankruptcy. The stock was trading as high as $160 in March 2022.
Binance imposes limits on fiat transactions
As we reported on Kriptokoin.com, on January 21, Binance announced that due to the policy at Signature Bank, only users with a valuation of more than $100,000 will be able to transact fiat money transactions in the US.
Fed rejects application for crypto custody service
On January 27, the Fed rejected crypto bank Custodia’s two-year application to become a member of the FED system, citing “security and soundness” risks. The Kansas City Fed branch also rejected Custodia’s application for a main account that would give it the ability to use wholesale payment services and hold reserves directly at the Fed.
Fed releases policy statement
The same day, the Fed issued a policy statement discouraging banks from holding crypto assets or issuing stablecoins. The statement expanded its mandate to include government chartered banks without FDIC insurance, in response to Special Purpose Depositary Institutions (SPDIs) like Custodia, which can hold cryptocurrencies as well as fiat for their banking customers.
National Economic Council issued policy statement
On January 27, the National Economic Council issued a policy statement dissuading banks from trading crypto assets directly or continuing exposure to cryptocurrency investors.
DoJ’s Silvergate investigation
On February 2, the fraud unit of the US Department of Justice (DoJ) announced that it had launched an investigation into Silvergate over its dealings with FTX and Alameda.
Conclusion: What will happen in the future?
According to experts, with all of the above, the US seems to be following China’s path. The situation seems to be heading towards a widespread US crypto ban. This not only affects the crypto market in the US, but also cryptocurrencies worldwide. The US is one of the largest markets for crypto. But time will tell what will happen in general.
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