The news: Crypto firms are getting squeezed out as US regulators are allegedly putting pressure on US banks to cut ties with digital asset firms, per Cointelegraph.
What’s happening? Various US regulators are said to be discouraging banks’ involvement in the crypto markets, with a purported end goal of leaving the crypto space unbanked. Rumors are swirling that while regulators’ public statements neither encourage nor discourage banks from engaging in crypto activities, behind the scenes they’re putting pressure on banks to cease all such activity.
What’s the industry saying? Players in the crypto markets worry that US retail investors will struggle to exchange their digital assets into USD, and that the increasing pressure from regulators will cause crypto exchanges to end their US operations. However, there are views on both ends of the spectrum.
Is your bank safe? The initiative seems geared more toward curbing retail investors’ ability to access digital asset markets—not so much institutional investors' access. That’s good news for financial institutions that have recently grown their institutional crypto divisions.
Our take: US regulators have been slow to regulate the crypto markets, and thus far they’ve only used enforcement to dictate what’s right and what’s wrong. But banks and crypto firms are now frustrated by the conflict between regulators’ messaging through reports and their alleged behaviors.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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