Crypto Is Being Pressured – Insider Intelligence Trends, Forecasts & Statistics

The news: Crypto firms are being pushed out as US regulators are reportedly putting pressure on US banks to cut ties with digital asset firms, per Cointelegraph.

What’s up? Various US regulators are said to be discouraging banks’ involvement in the crypto markets, with a purported end goal of leaving the crypto space unbanked. Rumors swirl that while the regulators’ public statements neither encourage nor discourage banks from engaging in crypto activities, behind the scenes they put pressure on banks to cease all such activity.

• The founders of new crypto startups claim they can’t get a bank account anywhere in the United States.
• Coin base CEO Brian Armstrong said US regulators are trying to ban crypto betting for US retail investors. News supporting this claim broke today – the Securities and Exchange Commission told the crypto exchange Kraken to end its crypto wagering program for American investors.
• Binance recently announced that it will only facilitate transactions in USD more than $100,000 due to new policy from Signature bank.

What does the industry say? Players in the crypto markets worry that US retail investors will struggle to exchange their digital assets for USD, and that the increasing pressure from regulators will cause crypto exchanges to end their US operations. However, there are views at both ends of the spectrum.

• Supporters mean the pressure will force the crypto markets to fall in line with regulatory frameworks. Those crypto companies that do not comply will eventually be shut down.
• Critics think The move will hamper the growth of crypto markets in the US compared to the rest of the world. They worry that the United States will fall behind in financial and technological innovation as a result. Some believe too the lack of access to large US banks will promote riskier behavior in the shadow banking system.

Is your bank safe? The initiative seems more aimed at curb retail investors’ ability to access digital asset markets— not so much institutional investors’ access. That’s good news for financial institutions that have recently expanded their institutional crypto divisions.

• In August 2022, Black stone partnered with Coinbase to provide its institutional clients crypto trading capabilities
• In May 2022, Goldman Sachs offered his first bitcoin backed loan, and shortly afterwards extended the option to all its institutional customers. In June 2022, it began offering institutional clients an Ether-linked forward derivative.

Our opinion: US regulators have been slow to regulate the crypto markets, and so far have only used enforcement to dictate what is right and wrong. But banks and crypto firms are now frustrated by the conflict between regulators’ messages through reports and their alleged behavior.

• Regulators’ attempts to close the crypto markets to retail investors seem like the easy way out. Instead of spending time understanding the appeal of digital assets and creating controls around the industry to facilitate safe and secure banking, they are trying to wash their hands of it.
• Even if US regulators are able to deter investors from activity in the US crypto markets, digital assets are not going away. Not only will the US fall behind in a major technological advance in the financial industry, the pressure could also prevent foreign firms from doing business in the country, especially if much of the rest of the world embraces crypto.