Dallas-based United Texas Bank is the latest crypto-friendly bank to face a cease and desist order from the US Federal Reserve, according to a press release issued on September 4, 2024.
Federal Reserve Keeping A Close Eye On Bank’s Crypto Business
The US Federal Reserve has identified United Texas bank as having “significant deficiencies” in its dealings with crypto-based entities, including foreign correspondent banking and digital currency customers.
Specifically, the Federal Reserve has raised concerns about United Texas Bank’s risk management systems, compliance with anti-money laundering (AML) rules and regulations, and the Bank Secrecy Act (BSA). Notably, the official order has not detailed how the bank fell short of achieving the required benchmarks, violating the compliance program.
According to the order, the Federal Reserve examined the Dallas-based bank in May 2023. United Texas Bank has taken several measures to bolster its AML and BSA compliance program.
The release notes that the bank’s board of directors is working on submitting a plan to strengthen its oversight of AML and BSA compliance. The bank has 90 days from the date of issue of the cease and desist order to submit the plan. In addition, the bank must share within 60 days a written, revised customer due diligence program.
The likely cease and desist order faced by the United Texas Bank for dealing with cryptocurrencies will alert other crypto-friendly banks in the US, forcing them to review and upgrade their existing risk and AML mechanisms.
Upcoming US Elections Crucial For Crypto Industry
The tightening noose around banks and financial institutions dealing with digital currencies has reinforced the significance of the US Presidential elections scheduled for November 2024.
As previously reported by Bitcoinist, Wyoming-based Custodia Bank had to lay off about 25% of its workforce to preserve capital for expenses related to legal proceedings against the Federal Reserve.
As a result of the Biden administration’s constant surveillance of the crypto space, overall sentiment in the crypto industry appears to have slightly tilted toward Republican Presidential candidate Donald Trump.
Recently, Trump made public his intentions to make the US the “crypto capital of the planet.” Trump has also spoken against the constant hounding of crypto businesses in the country and indicated that he would replace the current US Securities and Exchange Commission (SEC) Gary Gensler should his Presidential candidacy be successful.
However, to say that the crypto industry has witnessed no development or advancement under the Biden administration would be disingenuous.
Earlier this year, the SEC approved highly-anticipated spot Bitcoin exchange-traded-funds (ETFs), paving the way for billions of dollars to be injected into the leading digital asset. Similarly, in July 2024, the financial watchdog approved spot Ethereum ETFs, allowing institutional and retail investors to gain exposure to the top smart contract platform.
