The US government’s regulatory strategy towards crypto firms
According to Nic Carter, co-founder of venture firm Castle Island and crypto intelligence firm Coin Metrics, the purported strategy involves isolating the traditional financial system from the cryptocurrency market by relying on “multiple agencies to discourage banks from dealing with crypto firms.” The goal of this strategy is to lead crypto businesses to become “completely unbanked.” This strategy is aimed at isolating the traditional financial system from the cryptocurrency market.
“Regulators intimidate and blackmail bank management behind the scenes, then produce public ‘advice’ emphasizing that banks are still free to hold cryptocurrencies or serve cryptocurrency customers. In fact, they are not at all free to act this way in any way.
A joint statement was issued on January 3 by the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency warning of the risks of banks engaging in crypto and urging them to refrain from doing so due to . “safety and soundness”. This incident is among other recent regulatory developments. In the same month, Binance made the announcement that it will no longer process any US currency transactions that were less than $100,000 due to a new policy implemented by Signature Bank.
Signature Bank announced in December 2022 that it intended to limit the number of cryptocurrency services it offered, refund customers’ money and cancel their accounts. Due to liquidity concerns caused by the bear market and the collapse of FTX, the bank reportedly borrowed nearly $10 billion from the US Federal Home Loan Banking System in the last quarter of 2022.
“The banks are reassessing whether it is worth continuing to offer these services in light of the potential risks.”
According to comments made by Coinbase CEO Brian Armstrong on Twitter, another focus for US authorities appears to be the ban on retail crypto staking services. Staking is a method that allows cryptocurrency investors to place their digital assets under the control of a smart contract in exchange for incentives and passive income.
The methods used by the authorities in the United States are not new. Operation Choke Point was a regulatory program implemented by the federal government in 2013 targeting a number of “high-risk” sectors as well as increasing the level of supervision of financial institutions that provide services to these types of companies.
Impacts on crypto companies
