Investing.com – There is a trend in the US to crack down on crypto firms and banks that offer services to the crypto industry, writes Cointelegraph.
The purported strategy is to isolate the traditional financial and banking system from the crypto market with so-called agencies to dissuade banks from dealing with crypto firms.
Cryptocurrency and traditional banks are feeling huge pressure from the Fed and FDIC [Федеральной корпорации по страхованию депозитов]and as a result, many startups simply have nowhere to get funding.
Regulators covertly threaten and intimidate bank executives and then issue public guidelines emphasizing that banks can still store crypto or serve crypto clients, but in fact, there is no way they can do so.
A joint statement by the Fed, FDIC and the Office of Foreign Exchange was recently released warning of the risks for banks dealing in cryptocurrencies and urging them to refrain from doing so for the sake of safety and security concerns.
And in January, the largest crypto exchange, Binance, announced that it would only process transactions in US dollars worth more than $100,000 due to the new policy of Signature Bank. The fact is that in December 2022, Signature Bank announced its plans to reduce crypto services, return funds to customers and close their accounts. In the last quarter of 2022, the bank borrowed almost $10 billion from the US Federal Home Loan Banking System due to liquidity problems following the FTX crash.
Cryptocurrency exchanges and related intermediaries that operate outside of the US are of particular concern to regulators, as their choice of jurisdiction is usually geared towards maximizing profits at the expense of the client.
Banks are still deciding whether there is a risk to continue providing these services.
Another avenue for U.S. regulators to crack down on cryptocurrencies appears to be a ban on retail customer staking services, a process that allows crypto investors to lock crypto assets in a smart contract in exchange for rewards and passive income. Perhaps the SEC would like to get rid of U.S. staking of cryptocurrencies for retail clients.
If we talk about the consequences for the crypto industry, they can range from the restriction of the ability of retail holders to exchange cryptocurrencies for dollars to the closure of cryptocurrency exchanges in the US market and the lack of access to financial innovation.
However, as crypto financial services evolve to comply with the established regulatory framework, this means companies in the space will need to comply with regulation or cease to exist.
It is also possible that the initiatives of the regulators will be unproductive for the industry and retail investors, expanding the possibilities of “shadow banks” and further slowing down their development in the country.
— Materials of Cointelegraph were used in the preparation
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