The recent regulatory action by the US Federal Reserve against Customers Bank has raised concerns in the cryptocurrency industry. The Fed’s move was prompted by violations of the Bank Secrecy Act, Anti-Money Laundering laws, and OFAC regulations due to the bank’s involvement with digital assets. Customers Bank has been mandated to enhance its oversight, risk management, and compliance measures within a 60-day timeframe. This includes improvements in board oversight, BSA/AML compliance, and OFAC adherence, as well as advance notification to the Fed of any new initiatives or products.
Gemini co-founder Tyler Winklevoss believes that Operation Chokepoint 2.0 is still in effect and functioning through the Fed’s latest enforcement action. He pointed out that the regulatory measures centralize decision-making, giving the Fed the authority to approve or deny new banking relationships with crypto companies. Winklevoss argued for a principles-based regulation that would allow individual banks to make their own decisions regarding banking companies, rather than centralizing this process with the Federal Reserve.
The cryptocurrency industry has voiced concerns over Operation Chokepoint 2.0 being a policy of President Biden’s administration aimed at restricting the industry. While the Federal Reserve maintains its independence, the Biden administration has significant influence over regulatory bodies such as OFAC and the SEC. Winklevoss warned that current regulatory actions may escalate if Vice President Kamala Harris wins the upcoming election and Elizabeth Warren remains in the Senate. He expressed that the current measures are just the beginning and could lead to harsher actions in the future.
Winklevoss cautioned that the anti-crypto policies of the Biden-Harris administration could have a detrimental impact on the cryptocurrency industry if they continue for another four years. He likened the Fed’s current enforcement actions to “playing nice with nerf guns,” suggesting that more severe measures could be implemented in the future. The industry is bracing itself for potential challenges and uncertainties as regulatory crackdowns continue to affect crypto companies and their operations.
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