The Fed's enforcement on Customers Bank restricts new banking ties with crypto firms, raising concerns over centralized control.
Industry leaders fear increased U.S. regulatory scrutiny could limit crypto innovation and access to banking services.
The Fed's actions are fueling political debates about the administration's stance on cryptocurrency, with concerns over future industry relations.
The Customers Bank, which supports cryptocurrencies, is the target of enforcement action by the U.S. Federal Reserve, which has recently increased its monitoring of the cryptocurrency industry.
The action is considered a component of Operation Choke Point 2.0 larger plan. Customers Bank must give a 30-day notice period to the Federal Reserve before beginning any new banking arrangements with cryptocurrency companies. This has raised questions within the cryptocurrency industry about how it might affect innovation and market expansion.
https://Twitter.com/tyler/status/1821721465039024547 Impact on Crypto-Friendly Banks
One of the few financial institutions in the US still providing services to cryptocurrency businesses is Customers Bank. Concerns have been raised by the Fed's decision to place stringent controls on this bank.
Critics assert that the Federal Reserve is effectively controlling which cryptocurrency companies are allowed to use banking services, which could seriously impede the sector's capacity to function.
The co-founder of Gemini, Tyler Winklevoss, emphasized the ramifications of this move, arguing that the Fed is centralizing authority for decisions that ought to be distributed throughout the banking sector.
Political Implications and Industry Concerns
Political discussions have also been triggered by the enforcement action, especially in relation to Vice President Kamala Harris' position on the cryptocurrency sector.
Charles Hoskinson, the founder of Cardano, is among the business leaders who think the current administration is against cryptocurrencies.
Hoskinson voiced worries that the U.S. cryptocurrency industry might suffer more if Harris carried out this strategy going forward. This has given rise to questions regarding Harris' sincerity in trying to mend relations with the industry.
Broader Implications for the Industry
The Fed's recent enforcement action is a part of a larger trend of increased regulatory scrutiny on the cryptocurrency industry, not an isolated incident.
A number of American banks that catered to the cryptocurrency industry have failed since March 2023, including Silicon Valley Bank and Silvergate Bank. For cryptocurrency companies looking for trustworthy banking partners, this has created a challenging environment.
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