365Crypto
The U.S. Federal Reserve has issued a cease and desist order to crypto-friendly United Texas Bank, citing major deficiencies in its risk management and dealings with cryptocurrency clients. Following a May examination, the Fed flagged issues with the bank’s corporate governance, oversight by its board of directors, and compliance with anti-money laundering (AML) laws, including the Bank Secrecy Act (BSA).
Although the order didn’t specify how United Texas Bank failed to meet regulatory standards with its crypto clients, the Fed emphasized the need for improved risk management. The bank has since taken steps to strengthen its AML program and BSA compliance.
United Texas Bank, which has 75 employees and manages around $1 billion in assets, agreed to submit a formal plan to enhance board oversight of its compliance with BSA/AML regulations.
This action follows a similar enforcement in August against Customers Bancorp, another crypto-friendly institution. The Fed identified significant shortcomings in Customers Bancorp’s risk management systems and AML practices, leading to corrective measures.
These enforcement actions have sparked concerns that the government is deliberately pressuring banks to cut ties with the crypto industry, a move some call “Operation Chokepoint 2.0.” Dan Spuller, head of affairs at the Blockchain Association, claimed that the cease and desist order against United Texas Bank was part of this broader effort to stifle crypto involvement in banking.
These developments reflect growing regulatory scrutiny on banks engaging with the cryptocurrency sector.
