Crypto Banking Crisis: Fed’s New Restrictions and Their Impact on the Industry’s Future

Crypto Banking Crisis: Fed’s New Restrictions and Their Impact on the Industry’s Future

Crypto Banking Crisis– The recent enforcement action by the United States Federal Reserve against Customers Bank, a notable supporter of the cryptocurrency sector, has ignited speculation about Vice President Kamala Harris’ commitment to improving relations with the crypto industry. The move has led many to question the authenticity of Harris’ proposed ‘crypto reset’ and whether it is merely a facade.

Tyler Winklevoss Speaks Out

On August 9, Tyler Winklevoss, co-founder of Gemini, took to X (formerly Twitter) to criticize the Fed’s actions. Winklevoss asserted that the Fed’s latest measures confirm that Operation Choke Point 2.0 is ongoing and described the Harris crypto ‘reset’ as a “scam.” He highlighted that these regulatory actions reveal a deeper strategy to control and potentially stifle the crypto sector’s growth.

Crypto Banking Crackdown Details

The Federal Reserve’s enforcement action against Customers Bank involves a 13-page directive that requires the bank to provide a 30-day advance notice before entering into any new banking relationship with a cryptocurrency company. This regulation could significantly impact the operations of crypto firms, limiting their access to essential banking services.

Implications for the Crypto Industry

Winklevoss emphasized that Customers Bank is one of the last remaining banks in the U.S. that is friendly towards cryptocurrency businesses. He criticized the centralization of decision-making within the Fed, arguing that such decisions should be made on a case-by-case basis by individual banks rather than being imposed from a central authority.

Charles Hoskinson Joins the Critique

Cardano founder Charles Hoskinson echoed Winklevoss’ concerns, asserting that the current administration, under President Joe Biden, is actively working against the crypto industry. Hoskinson warned that supporting Harris could further damage the U.S. crypto sector, suggesting that her policies might continue the perceived “war on crypto.”

Calls for Progressive Stance on Digital Assets

In response to the Fed’s actions, a group of U.S. lawmakers and congressional candidates have called for a progressive stance on digital assets and blockchain technology. They urged Democratic National Committee Chair Jaime Harrison to advocate for policies that support the growth and innovation within the crypto industry.

Banking Sector Turbulence

Between March and August 2023, the U.S. banking sector faced significant turmoil, with several banks catering to the crypto industry, such as Silvergate Bank, Signature Bank, and Silicon Valley Bank, experiencing severe declines or closures. This period of instability has heightened concerns about the future of crypto-friendly banking institutions and their ability to operate under stringent new regulations.

The combination of these regulatory actions, high-profile criticisms, and ongoing debates about crypto policy highlights the growing tension between the cryptocurrency industry and regulatory bodies. The market will be closely watching how these developments unfold and their potential impact on the industry’s future.