US authorities allegedly using banks to crack down on crypto – Nic Carter News ▸ US ▸ Regulation
US authorities allegedly using banks to crack down on crypto – Nic Carter
CoinMetrics co-founder Nic Carter said crypto firms are finding it increasingly difficult to obtain access to onshore banking systems due to unfriendly government regulations.
2 min read
Updated: Aug. 2, 2023 at 2:17 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
CoinMetrics co-founder Nic Carter alleged that the U.S. government is using the banking sector to execute a widespread crackdown against the crypto industry.
Nic Carter said in a Jan. 8 guest post for PirateWires that crypto firms are finding it increasingly difficult to obtain access to onshore banking systems due to unfriendly government regulations. Carter said:
“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.”
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.
Carter further explained that the recent regulatory faceoff with crypto firms could be a resurgence of Operation Choke Point (OCO). In 2013, federal officials used OCO to apply pressure on banks to shut down accounts of businesses they were ideologically opposed to.
As a result, many Poker companies and Payday lenders found out that their bank accounts were terminated with little explanation aside from “regulatory pressure.”
Carter cautioned that if U.S. regulators don’t reconsider their pressure on banks, they risk losing more crypto businesses and U.S. investors to regions with less sophisticated jurisdictions.
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Posted In: US, Regulation
Author 
Christian Nwobodo
Christian is a crypto-curious nerd who loves to investigate how protocols work under the hood. Christian is interested in DeFi protocol research, token economics, and on-chain analytics.
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In this article
Coin Metrics
Coin Metrics is a leading provider of crypto asset market and network data.
Silvergate
Silvergate is a Federal Reserve member bank and the leading provider of innovative financial infrastructure solutions and services for the growing digital currency industry, based in La Jolla, California.
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Nic Carter is a partner at Castle Island Ventures and the co-founder of blockchain data aggregator Coinmetrics.io.