A man (pictured) rides a bicycle past a store advertising a Bitcoin ATM in Nicosia on September 25, 2024. … [+]
Two years after the FTX debacle, financial regulators are still closely monitoring the crypto industry. In the United States, several targeted enforcement actions have been imposed against crypto banks and companies, indicating an increased focus on compliance and risk management in this area.
After the collapse of Signature Bank and Silvergate, Pennsylvania-based Customer Bank onboarded customers like Kraken and absorbed nearly $2 billion in deposits from crypto customers, making it a major player in the crypto banking space. It surfaced. A big draw for Customers Bank was its real-time payment system licensed from TassatPay. This is the same technology that powers Signet at Signature Bank. However, Customers Bank was found to be under federal surveillance and was subject to an enforcement action by the Federal Reserve on August 5, 2024. The measure cited “serious deficiencies” in the bank's risk management practices and compliance with anti-money laundering (AML) regulations. Especially in relation to digital asset services.
Similarly, Dallas-based United Texas Bank also faced regulatory action for its crypto-related activities. On August 28, 2024, the bank was accused of “deficiencies” in its AML compliance and risk management practices, particularly in its crypto customer and overseas correspondent banking operations. United Texas Bank, which serves many crypto customers, is also a correspondent bank for Bank Flick, a Liechtenstein-based specialist crypto services agency. These enforcement actions reflect growing concerns by regulators about crypto banks' ability to manage the unique AML risks posed by digital assets.
At the same time, TD Bank was fined billions of dollars for failing to meet AML standards. TD Bank did not automatically monitor a significant portion of its transactions, leaving 92% of its total transaction volume unchecked from January 1, 2018 to April 12, 2024. This failure allowed “trillions of dollars a year to go unmonitored as potentially suspicious.” Activities. TD Bank's flaws do not only relate to cryptocurrency transactions, but the enforcement action also targets “Customer Group C'' who allegedly laundered funds from a UK-based cryptocurrency exchange to a Colombian financial institution. is mentioned.
On the other side of the Atlantic, regulatory scrutiny of the cryptocurrency sector is also increasing. In the UK, crypto payments company BCB was the subject of an S166 investigation by the Financial Conduct Authority (FCA) this year, showing that the regulator is paying close attention to how crypto companies manage risk. . BCB is known for providing banking services to leading institutions in the digital asset space, including Bitstamp, Crypto.com, Gemini, and Kraken. There are growing concerns about stablecoin compliance in the EU, with some reports suggesting that Coinbase may soon delist USDT.
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Critics of such enforcement argue that regulators are applying double standards when it comes to crypto companies. Nick Carter, a prominent voice in the crypto space, claims that US crypto companies are being unfairly targeted by politically motivated regulatory actions, which he calls “Operation Chokepoint 2.0.” They are especially vocal about what they call. Some people point out the difference in how Binance and TD Bank are treated. Binance CEO Qiao Changpeng (CZ) remains in prison amidst allegations of AML failures, despite TD Bank's significant failures in monitoring trading volumes. None of the bank's top executives have faced similar consequences.
But it's not all doom and gloom for crypto companies. In Europe, there are signs of progress with regulatory clarity and companies adapting to changing circumstances. Signum Bank, a Swiss-based digital asset specialist, recently registered with Liechtenstein regulators in preparation for expansion into the EU. Similarly, Portugal's Bison Bank has launched a subsidiary, Bison Digital, aimed at providing regulated services to Europe's growing digital asset industry. These developments show that regulators are not unanimous in cracking down on the industry.
Over the past two years, regulatory scrutiny of the crypto industry has increased sharply, with a particular focus on banks and institutions servicing digital assets. Enforcement actions against banks such as U.S. Customers Bank and United Texas Bank reveal how seriously regulators are taking the crypto sector. Meanwhile, the scrutiny of companies like BCB in the UK and the possible delisting of USDT in the EU further highlights the global nature of this regulatory change.
Despite increased scrutiny, the outlook for crypto banking is not entirely bleak. While U.S. companies face enforcement, companies promoting compliance abroad see opportunities for expansion. As banks like Sygnum and Bison Digital demonstrate, there is still room for growth in this rapidly evolving industry. While the road ahead is undoubtedly difficult for crypto banks, the potential for innovation and expansion remains strong for those able to adapt to new regulatory realities.
