To regulate pirates, cut off access to their ports and see how long they last at sea. That’s the playbook being used in the U.S. to rid the scourge that is crypto too, or so it would seem.
For crypto, banks are its ports vital on- and -off-ramps for dollars to move on-chain. But banks cannot hold crypto as principal, the Fed’s Board of Governors said in a bulletin made effective last week.
The Fed is saying, we don’t want an express connection between the U.S. banking system and [the] crypto economy,” Steven Kelly, a senior research associate at the Yale Program on Financial Stability, tells Axios.
To Castle Island Ventures’ Nic Carter, however, that guidance as well as a host of other actions taken by federal authorities as of late, are evidence of what he considers a coordinated attack on crypto that he dubbed Operation Chokepoint 2.0.
The Securities and Exchange Commission has been levying complaints against crypto firms lately and appears to be winding up for more.
Crypto-serving institutions like Signature Bank said they would scale out of digital assets. One of its major customers, the crypto exchange Binance, halted fiat withdrawals last week while it sought a new banking partner.
The OCC was said to be asking others including Paxos and Protego Trust which had been operating on conditional charters — to withdraw their pending applications.
Paxos, the white-label stablecoin issuer behind Binance’s BUSD, was ordered today to stop minting them. Paxos has not addressed an earlier report that the firm was served a Wells notice by the SEC over possible security offering violation.
There is no express ban on crypto, but there doesn’t have to be one.