Banks limit deals with crypto firms amid rising regulation
Banks in the traditional finance sector are exercising caution before interacting with companies operating in the crypto space, thanks to the current sentiments of banking regulators. Recent statements from these regulators have pointed towards a not-so-friendly stance towards crypto firms.
According to a 14 February report by Standard & Poor Market Intelligence, banking regulators were viewing digital assets as a threat to the safety of not only the banking industry but also the broader traditional finance sector. While formal rules are yet to be issued by U.S. agencies, industry experts informed S&P Global Market Intelligence that regulators have made their stance clear.
According to James Stevens, co-leader of the Financial Services Industry Group at Troutman Pepper, federal banking regulators have little faith in a scenario where banks will engage with crypto firms in a safe manner.
The fallout from the string of bankruptcies and collapses in the crypto industry last year is to blame for the increased regulatory security and crackdown by regulators. This has reportedly led to agencies teaming up and working together to ramp up efforts related to regulation and enforcement.
On 10 February, Christopher Waller, the Governor of the Federal Reserve, delivered a warning to banks looking to engage with crypto firms during his speech at the Global Interdependence Center Conference. He warned:
“A bank engaging with crypto customers would have to be very clear about the customers’ business models, risk-management systems and corporate governance structures to ensure that the bank is not left holding the bag if there is a crypto meltdown.”
The report provided a timeline of the guidance issued by regulators for banks
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