Tyler Winklevoss, the co-founder of Gemini, has raised concerns about the latest regulatory action taken by the US Federal Reserve against Customers Bank. The Fed’s move comes as a response to potential violations by the bank of the Bank Secrecy Act, Anti-Money Laundering laws, and Office of Foreign Assets Control (OFAC) regulations in relation to digital assets. Customers Bank has been mandated to strengthen its oversight, risk management, and compliance measures within a 60-day period. This includes improving board oversight, BSA/AML compliance, and adherence to OFAC regulations.
Over the past year, there has been growing criticism from crypto stakeholders who believe that Operation Chokepoint 2.0 is an attempt by President Biden’s administration to stifle the cryptocurrency industry. While the Federal Reserve is meant to operate independently, the Biden administration has significant influence over regulatory bodies like OFAC and the SEC. Winklevoss argues that the Fed’s recent enforcement action illustrates how Operation Chokepoint 2.0 is being implemented. He highlights that Customers Bank must now seek approval from the Fed 30 days in advance before engaging in any new banking relationships with crypto companies.
Winklevoss points out that the Fed’s enforcement action effectively centralizes decision-making, placing the Fed in the position of a gatekeeper for crypto companies seeking banking services. This removes discretion from individual banks, which could have otherwise decided whether to engage with a particular company. He warns that if Vice President Kamala Harris wins the upcoming election and Elizabeth Warren remains a Senator, the regulatory environment for crypto companies could become even more restrictive. He expresses concerns that the current regulatory measures are just the beginning and that harsher actions may follow.
Future Implications
Winklevoss cautions that continued anti-crypto policies by the Biden-Harris administration could have severe consequences for the cryptocurrency industry in the long run. He suggests that the current regulatory actions are only a preview of what could come if these policies persist for another four years. The implications of Operation Chokepoint 2.0 and the Fed’s regulatory actions are likely to impact the way crypto companies operate and engage with traditional financial institutions in the future.
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