Lawrence Damilola
United Texas Bank, one of the few remaining U.S. banks that services cryptocurrency firms, has been issued a cease-and-desist order by the Federal Reserve.
The Dallas-based bank was cited for “significant deficiencies” in its adherence to anti-money laundering (AML) laws related to its dealings with crypto clients, among other alleged violations. The order was issued on Wednesday, and while it did not specify the exact nature of the non-compliance, it indicated that the bank must take immediate action to address the issues.
The Federal Reserve’s notice stated that the bank’s leadership had agreed to the cease-and-desist order instead of going through formal legal proceedings. The bank was given 90 days to submit a five-pronged action plan to meet proper AML compliance standards. The order did not provide details on how the bank’s crypto business failed to comply with AML regulations but emphasized the need for corrective measures.
United Texas Bank is the latest in a line of crypto-friendly banks to face regulatory action from U.S. authorities. Last month, Customers Bank, a Pennsylvania-based institution, also drew the Federal Reserve’s attention for its dealings with cryptocurrency companies. In response, Customers Bank agreed to enhanced oversight.
Customers Bank had become a preferred choice for the US crypto industry after the collapse of Signature and Silvergate banks in 2023. With these major players out of the market, many crypto firms in the U.S. have been forced to seek banking relationships, with the few remaining institutions willing to accept them as clients or consider moving their operations offshore.
The Federal Deposit Insurance Corporation (FDIC) previously warned that deposits from cryptocurrency companies could lead to volatility and pose significant liquidity risks for banks. These concerns have prompted some banks to limit their exposure to the crypto industry. Metropolitan Bank, based in New York, which previously had about $210 million in deposits from crypto firms, decided to unwind its crypto business. This included ending relationships with notable clients, such as the major exchange platform Crypto.com.
As regulatory actions continue, the remaining banks servicing the crypto industry may need to reassess their compliance frameworks and risk management strategies to align with U.S. financial regulators’ expectations.
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Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
