US Officials Pressuring Banks to Break Link with Crypto Companies

United States authorities have been rumored to have quietly made suggestions that traditional banks cut off connections with crypto firms. 

Nic Carter, a partner at Castle Island Ventures, provided specifics of the tactics used by the authorities in a newsletter. He highlighted a series of events concerning banks, including policies that have been adopted in recent times.

One such event highlighted is the letter that was written by a group of Senators; Roger Marshall, John Kennedy, and Elizabeth Warren to Silvergate bank chastising the institution for doing business with FTX and Alameda Research. They also accused the bank of failing to report suspicious activities with its clients.

Carter also made mentioned a scenario when Binance placed a restriction on its users’ USD transfers. Based on the restriction, Binance fiat partner, Signature Bank was prohibited from accepting and approving bank transfers below $100,000. As a result, any user wishing to buy or sell cryptocurrency worth less than $100,000 will be unable to do so via SWIFT.

Another event that fueled the rumor is the statement made by the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), expressing their skepticism about crypto.

Carter stated that, while neither the Feds nor other U.S. regulators have explicitly banned banks from involving with crypto, their policies and investigations have highly informed the decisions of crypto investors.

What this Means for the Parties Involved

If authorities prohibit banks from dealing with cryptocurrency, it would likely have a significant impact on the use of cryptocurrencies. This may pose a challenge for people to purchase, sell, and hold digital assets if banks were unable to handle cryptocurrencies.

While speaking on the consequences, Bianance’s CEO, Changpeng Zhao is of the opinion that the reluctance of commercial banks to participate in crypto will affect the adoption of crypto in the short term. Additionally, he noted that the banks might also suffer from an impending danger to their continued existence.

Furthermore, the lack of banks in the cryptocurrency industry would probably cause people to have less faith in cryptocurrencies. This might lead to a decline in demand, which would lower their value.

On the other hand, the crypto sector has demonstrated a propensity toward decentralization. Therefore, decentralized exchanges (DEXs) can provide options for people to trade cryptocurrencies without the participation of banks.