Banks Pull Away from Cryptocurrency Companies Due to Regulatory Crackdown

02/17/2023 07:32 • Blockchain Briefs • 86 views

It is reported that some banks in the United States are moving away from cryptocurrency companies, because the crackdown by the United States regulatory authorities may separate the digital currency from the real world financial system. After the bankruptcy of FTX last year, regulators expressed concern about the relationship between banks and cryptocurrency customers. The United States Securities and Exchange Commission (SEC) is actively cracking down on the larger players in the industry or reducing their scope of influence. People familiar with the matter said that the move has alerted bankers who are unwilling to deal with customers targeted by the SEC. Now bankers are reassessing all their exposure to encryption, no matter how small. A few small banks in the encryption field are reducing their exposure to the market or completely cutting off their links with the market. Banks that keep a distance from cryptocurrencies are making greater efforts to stay away from this business, close accounts and avoid customers with potential connections to the industry. Without bank cooperation, cryptocurrency companies are difficult to pay employees’ wages, and it is also difficult for customers to deposit or transfer money into digital currency.

People familiar with the matter: Banks are going their separate ways with cryptocurrency under the regulatory crackdown

Analysis based on this information:

The recent crackdown by the United States regulatory authorities has led to a growing number of banks distancing themselves from cryptocurrency companies. This follows the bankruptcy of FTX last year, which raised concerns among regulators about the relationship between banks and cryptocurrency customers. As a result, the United States Securities and Exchange Commission (SEC) has been actively taking action against larger players in the industry or reducing their scope of influence. This has alarmed bankers, who are now unwilling to deal with customers targeted by the SEC.
In response, banks are reassessing their exposure to encryption, even if it is small. Smaller banks in the encryption field are also reducing their exposure to the market or cutting off their links entirely. Banks that are keeping a distance from cryptocurrencies are increasing their efforts to stay away from this business, closing accounts, and avoiding potential customers with any connection to the industry.

The move by banks to pull away from cryptocurrency companies has made it increasingly difficult for these companies to pay employee wages and for customers to transfer and deposit money into digital currency. Indeed, bank cooperation is essential for cryptocurrency companies to operate as they are heavily reliant on the banking system to transact with both customers and employees. As a result, the crackdown by regulatory authorities has had a significant impact on the industry, and it is unclear how long it will take for cryptocurrency companies to regain the trust of banks.

In conclusion, the recent regulatory crackdown by the SEC has led to increased scrutiny of banks’ exposure to cryptocurrency companies. As a result, banks are distancing themselves from the industry, creating challenges for cryptocurrency companies to operate. This further highlights the challenges and risks that are associated with the cryptocurrency industry, and the importance of regulatory oversight to ensure the safety and stability of the financial system.

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