Fed targets United Texas Bank for serving crypto customers The bank alleged “significant lapses” in its adherence to anti-money laundering laws. The management of the company consented to the cease and desist order.
United Texas Bank, one of a handful of domestic lenders still banking on crypto firms in the United States, has drawn the ire of the US Federal Reserve.
The Fed called the Dallas-based bank a Cessation and Cessation Order on Wednesday, citing “significant lapses” in the bank’s adherence to anti-money laundering laws related to its transactions with crypto customers, among other alleged violations.
The notice did not explain how the bank’s crypto business complies with AML regulations.
However, the order stated that the bank’s leadership has mutually agreed to agree to the order in lieu of formal proceedings and has 90 days to submit a five-pronged action plan to ensure proper AML compliance standards.
According to its latest financial figures ReportUnited Texas Bank has 75 employees and approximately $1 million in total assets.
This notice is the latest example of a crypto-friendly bank taking fire from the US central bank.
Customers Bank drew similar attention from US authorities last month.
In that case, the Pennsylvania-based lender agreed to stricter oversight by the Federal Reserve of crypto firms’ banking.
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Previously, Customers Bank was seen as the US crypto industry’s preferred bank, a reputation it achieved after stepping into the void created by the collapse of Signature and Silvergate banks in 2023.
With the closure of Signature and Silvergate, US crypto firms have struggled to find other banks willing to accept them as clients.
Crypto clients have been forced to consolidate around a handful of lenders willing to accept or offshore their businesses.
Crypto companies have historically made banking partnerships in the US difficult.
The situation has worsened in recent months amid the Fed’s crackdown on remaining lenders servicing crypto firms.
Formerly Federal Deposit Insurance Corporation mentioned Deposits from crypto companies are volatile and pose significant liquidity risks to the stability of the banks that service them.
These enforcement actions have forced one-time crypto-friendly banks to limit their exposure to the sector.
Last year, New York-based Metropolitan Bank, one of the US crypto-friendly banks, had about $210 million in such deposits. unfolding Its crypto business, including clients like the exchange giant Crypto.com.
Osato Awan-Nomayo Our Nigeria based DeFi representative. He covers DeFi and technology. To share tips or information about articles, please contact him here [email protected].
Related Topics Federal Reserve—Anti-Money Laundering (AML)