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For investors, the SEC’s recent approval of the ETH ETF signaled a change in stance, but issues persist. Regulatory pressure feels like the crypto industry is being thrown into the sea with hands and feet tied. The Biden administration, through the SEC and other agencies, is trying to stifle the crypto industry in America.
Custodia Bank Shrinks
The US-based bank offers banking services to crypto companies, and not many companies do this. While JPMorgan and others facilitate ETF matters, they serve giants like BlackRock. So where will other crypto companies get their banking services? Of course, from much smaller alternatives like Custodia Bank.
However, the Biden administration is also trying to stifle this through the Federal Reserve Bank. The Fed is blocking the main account status that the bank needs to access the Fed’s liquidity facilities, including payment services to authorized institutions. This significantly increases the bank’s costs by requiring support from intermediary institutions for its operations.
The bank, which had to lay off 9 of its 39 employees, cites the federal government’s “Operation Chokepoint 2.0,” which they say the Biden administration has turned into a coordinated effort to cut the sector off from the broader banking system. Custodia founder Caitling Long said the following about the operation started during the Obama era:
“Operation Choke Point 2.0 has been devastating for the law-abiding US crypto industry, and Custodia Bank has taken a heavy hit despite our strong risk management and compliance record. We are trying to scale properly to sustain our operations by preserving our capital until Operation Choke Point 2.0 ends or our Fed lawsuit is successfully resolved.”
Biden Administration and Crypto
While the ETH ETF approval is a good step, Kamala Harris has not taken concrete steps despite Trump’s overly crypto-friendly stance. Moreover, the Biden administration’s pressure continues. This includes the Wells notice that the NFT platform OpenSea received from the SEC this week. The SEC views NFTs as securities and investment contracts and is preparing to file a similar lawsuit against the OpenSea platform as it has against exchanges for altcoins.
Legal pressure on DeFi giants and centralized exchanges also continues. But aren’t artworks exempt from being considered securities according to a pre-1980 decision? Yes, but the complex 100-year-old rules create a very suitable environment for the SEC to stifle the sector through the courts.
