Why will the Congress review to dismantle encoded currencies appear accurate results – Ledger Insights

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• House begins the investigation of dismantling banking services for cryptocurrencies
• Do banks or regulators bear the blame?
• Organizers have repeatedly warned banks from the encrypted currency sector
• Timing is important: the procedures before closing Silvergate, Signature deserves more attention
• Are there similar aspects with SAB 121 – informal guidance that works as rules.

On Friday, Congress member James Kumer sent a letter To many companies related to encrypted currencies to ask them about their experience in dealing with banking services. He wrote as Chairman of the Parliamentary Committee for Government Oversight and Reform, the same committee that was achieved in the Choke Point process during the Obama administration, where it has struggled with non -favorite industries with bank accounts.

One of the goals is to determine the extent of the authorities’ responsibility towards the banks themselves. This aspect will definitely provide accurate results. It is strange that it is this non -banking behavior that encouraged some to adopt cryptocurrencies, although the sector has become subject to similar rules.

On several occasions of the organizers The banking sector warned About the dangers of excessive exposure to cryptocurrencies or carry out encrypted currency activities. Perhaps it was part of the hatred of this sector. But this was also due to the fluctuations of encrypted currencies and the desire to protect the main banks and depositors from exposure to losses.

When the authorities issue such warnings, measures are taken such as preventing banks from providing cryptocurrencies, at some point the participation becomes a problem for banks. In reality, Disclosure of Federal Deposit Insurance Corporation (FDIC). Her cryptocurrency messages to banks revealed this particular friction. Banks start assessing costs and benefits.

Organizers provide a cover for bias

Meanwhile, this type of things provides a cover for those who also have political motives. There is an example of British politician Nigel Faraj, who was deprived of his bank money. Initially, the bank hid behind different excuses until political bias was revealed as the real reason. Another contributing worker was: Varage is no longer an important agent.

Congress member Kumer’s message indicates that Melania Trump has also been bankrupt. It is worth noting that Donald Trump did not mention. Why? Perhaps because they have different bank balances. Banks are commercial companies and are biting cost and benefits regarding whether the amount is worth the effort. The Trump family will be considered political exposed under the control rules of money laundering (AML), creating another inconvenience for banks.

Ledger Insights has often criticized the high costs of simplified money laundering rules. Referring to the inconvenience factor does not give banks an excuse, but rather highlights a reality. It has been personally cleared of the bank (unrelated to cryptocurrencies), so I have direct experience.

Is timing important?

The timing is likely to be important to these investigations, with two history in particular. March 2023 witnessed the loss of the encoded currency sector at the same time to the two skeats, which provide their services more, with other banks unwilling to bear the recession, in part due to the pressure of organizational bodies. On the one hand, this was the time when cryptocurrency companies desperately needed new banking services. On the other hand, the rapid clouds of coded currency deposits in two specialized banks highlight the risks facing banks – some exposure were acceptable, but not much.

Another relevant date is May 2022. Before that, the fluctuation of cryptocurrencies was clear. After the stable Terra currency collapsed in early May, cryptocurrencies began to decrease such as flies, with many prominent bankruptcy cases. The risks became more concrete.

The organizers will argue that these dates are not relevant because the risks were already present, but they simply did not appear. The primary goal of risk management is anticipation.

Many examples in the message of Congress member Kumer dating back to March 2023. Senator Tommy He wrote to the Federal Deposit Insurance Corporation (FDIC). It raises concerns about the behavior similar to Choke Point related to the encrypted currency sector in 2022 before its retirement. He stressed that the Acting President of FDIC GRUENBERG led FDIC during the original Choke Point activities. Grueberg took office in February 2022.

Parallel to SABB 121

In addition to the parallel with the original Choke Point process, there is also a similar process with the SAB 121 issued by the Securities and Stock Exchange, which is the accounting base that prevented banks from providing encrypted currency services, which was just done Eliminate. Lawyers Note Cooper Kirk That in Choke Point 2.0, the organizers “imposed binding requirements on the banking industry through informal guidance documents.”

Cooper Kirk’s Congress encouraged the investigation of the Choke Point 2.0 case and claimed that other things they consider illegal, including:

• It deprives businessmen of their constitutional rights in due legal procedures
• It deprives Americans of constitutional protection against the arbitrary practice of government authority
• The organizers exercise their authority on banks to choose and choose customers who may be served by banks
• The banks of the state that are legally entitled to reach the Federal Reserve system are deprived of their rights only because they serve the encrypted currency industry.
• Organizational bodies act arbitrary and volatile by their failure to explain their decisions sufficiently.

Focus and risks

One of the main contributors to dealing with cryptocurrencies is the risk of focus. Benkin was filled with services to the sector (Silvrgit) Or stop (SigningIn March 2023. Other banks did not want to be exposed to the sector because the regulators warned them against doing so. As a result, it was difficult to find banks ready to make up for the shortage.

The unpopular view is that the cryptocurrency community had a hand in closing the two banks. In both cases, the encrypted currency sector quickly withdrawn cash from banks in a short time and collectively. Banks are not designed for this purpose, although Silvergate has done a very good job in managing the $ 8 billion withdrawal process. The fact that Silvergate was the FTX bank that created the cloud that led to its voluntary ending.

In the case of Signature, the panic caused by the collapse of Silicon Valley caused the encrypted currency customers to withdraw their money very quickly. A member of the Board of Directors and former Congress member Barney Frank complained that the Federal Deposit Insurance Corporation was wrong to close it. The operating resulting from encrypted currencies meant that the lineage of the Signature Bank was not sound He was not allowed to re -financing Her real estate portfolio.

Rapid escape cases of coded bank balances gave some legitimate concerns to the organizers. This partially led to the subsequent void.

Crossed currencies are a relatively new industry and are seen as risky due to their volatility and exposure to anti -money laundering problems. Hence, there is a bank learning curve required to understand how risk management.

Banks that are likely to be ready to do so are those that want to target the encrypted currency sector as a customer base. But organizational bodies do not want to focus the risks, so they are not keen on specialized banks.

Discussing risk treatment

The Financial Stability Council and the global regulatory bodies have long warned of the risk of encrypted currencies if they become very interconnected with the basic banking system. Due to the fluctuations of encrypted currencies and the intensive use of the leverage, the cryptocurrency is actual risks.

When the Securities and Stock Exchange Authority canceled SAB 121, they not only said that banks should “deal with the matter” regarding the preservation of encrypted currencies. They said banks need to evaluate risks and determine emergency obligations, which is a reasonable approach.

In Europe, the exporters of stable currencies must keep a large percentage of assets in banks because the European Union has no such market for treasury bonds. To reduce the risks to banks, the exporters of stable currencies must distribute their reserves through many bank accounts.

Such examples, it is time now to take a constructive and transparent approach to risk management, instead of deceptive procrastination methods and organizers who hope this sector will disappear.