Government Using Banks to Attack Crypto
We’ve been warning that the Fed, the banks and the whole of TradFi looks at the competitive threat from crypto and wants to shut it down. CoinMetrics co-founder Nic Carter charges the banking sector is the new avenue of attack by government against the promise and privacy afforded by crypto and DeFi.
On the PirateWires podcast, Carter said crypto firms are finding it increasingly difficult to obtain access to onshore banking systems due to unfriendly government regulations.
“Specifically, the Biden administration is now executing what appears to be a coordinated plan that spans multiple agencies to discourage banks from dealing with crypto firms,” Carter said.
For context, anti-crypto lawmaker Elizabeth Warren reportedly issued a letter to Silvergate on Dec. 6, reprimanding the firm for providing banking services to FTX.
Barely 24 hours later, the crypto-friendly Signature bank informed its customers that it would shut down their crypto accounts and return their money. As a result, Binance announced that it would only process fiat transactions worth more than $100,000.
In a similar move, Metropolitan Commercial Bank announced a total shutdown of its crypto-related services.
Furthermore, the Federal Reserve reportedly denied crypto bank Custodia’s application to become a member of the Federal Reserve System due to high risk.
From a policy perspective, the Fed, the FDIC, and the OCC released a joint statement on Jan. 3 stating the risks banks face by engaging with crypto firms. Banks were strongly discouraged from doing so, citing “safety and soundness” risks.
Although the authorities did not openly ban banks from dealing with crypto clients, Carter said that the stringent policies and the DOJ’s recent investigations against Silvergate serve as a deterrent to other banks.