At the beginning of 2023, the three main banking regulators published a joint statement on the risks associated with crypto. The Federal Reserve (Fed), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) issued a joint statement outlining their longstanding position regarding crypto and banking. This statement is intended to provide clarity on how banks should treat cryptocurrencies and related activities, and highlighted the risks associated with this industry.
As the crypto industry has grown over the past few years, banks have been somewhat handcuffed by the FDIC as to the services they’re allowed to offer. Involving banks in crypto transactions calls for stricter rules for custody, trading, and investing. Banks offer secure transactions as they have been in the industry longer and regulations have been established already, while Fintech companies offer innovation and high returns for customers with easier access to the platform as identity verifications are more lenient. Ultimately, the goal is to avoid loopholes in the crypto regulations that may result in the use of banks to engage in fraud, scams, money laundering, and terrorism financing.
This week Binance lost its bank account and has limited the ability to buy and sell crypto on its platform with wire transfers.
Today we saw on twitter that there may be some “draconian” de-banking of crypto companies coming in the near future.
The key takeaway: The mix of banking and crypto transactions is an area that will surely be prioritized by regulators. Stay tuned for what comes next, and build your business using decentralized peer-to-peer technology that doesn’t rely on banks.