- U.S. regulators intensify scrutiny on banks serving crypto clients, impacting United Texas Bank.
- Federal Reserve orders United Texas Bank to address AML compliance deficiencies within 90 days.
- Regulatory crackdown leaves U.S. crypto firms struggling to find reliable banking partners.
The U.S. Federal Reserve has issued a cease-and-desist order to United Texas Bank, a Dallas-based financial institution known for servicing cryptocurrency firms. The order, announced on Wednesday, cites “significant deficiencies” in the bank’s compliance with anti-money laundering (AML) regulations, particularly concerning its dealings with crypto-related customers.
The Federal Reserve’s order needed to provide specific details on how United Texas Bank failed to adhere to AML standards. However, the central bank emphasized that these shortcomings were significant enough to warrant immediate corrective action.
The bank’s leadership has agreed to the order in place of formal proceedings and has been given 90 days to develop and submit a comprehensive action plan. This plan must address five key areas to ensure the bank meets the necessary AML compliance standards.
United Texas Bank is among a dwindling number of U.S. banks that continue to serve cryptocurrency firms, a sector that federal regulators have increasingly scrutinized. The bank’s recent troubles highlight the growing challenges financial institutions that engage with the crypto industry face.
This enforcement action against United Texas Bank is part of a broader regulatory crackdown on crypto-friendly banks in the United States. Last month, Customers Bank, based in Pennsylvania, faced similar scrutiny from federal authorities.
The bank accepted greater supervision from the Federal Reserve because it dealt with cryptos. This new upturn of regulatory pressure occurred after the closure of Signature and Silvergate banks in 2023, which created a gap of the banking service providers to crypto firms in the U. S.
Restrictions imposed by the U. S. regulators have made it challenging for the crypto firms to find banking services in their home country. Fewer banks are willing to take the perceived risks that come with dealing with their clients involved in the crypto business and so, some organizations have been forced to fewer or seek offshore banking services.
The FDIC has previously stated that crypto institutions deposits remain a high source of liquidity risks and adds to the challenges faced by banks across the country dealing with their crypto counterparties.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
