A statement released today from the Federal Reserve saw the regulator warn US banks about crypto-related liquidity risks. Now, with government intervention having many fearing for Operation Choke Point 2.0, the government’s attempt to shut down crypto, that same Fed warning could affect the more than 130 banks that are involved in crypto.
With regulatory agencies increasing their efforts against the crypto industry, the Federal Deposit Insurance Corporation (FDIC) has noted significant crypto adoption from banks. Finbold reported data released today that shows more than 136 banks in the country are already involved or planning to be involved in crypto-related activity.
Fed Warning Could Affect Significant Banks
Over the past few weeks, it seems as though the US Securities and Exchange Commission is issuing another settlement. Starting with Kraken and crypto staking, and eventually shutting down Paxos BUSD issuance. Subsequently, the Federal Reserve has not joined the discussion.
Releasing a joint statement today, the US regulatory body has wanted banks to stay on high alert against crypto-related liquidity risks. Conversely, with many fearing an Operation Choke Point 2.0 — that Fed warning could affect more than 130 banks.
Operation Choke Point 2.0 and Banking
A report published by the Office of Inspect General (OG) has stated the number of banks involved in the crypto sector. Stating that as of Jan. 2023, more than 130 banks are involved in or plan to be involved in crypto-related projects. The development of that involvement will undoubtedly take a hit now.
The greatest hindrance to crypto thriving in the US is not government involvement, it is a lack of regulatory clarity. Even as the Fed issued the warning, it came with no guidelines or restrictions. It simply provided a fearful note that the industry comes with risks.
Yet, with no regulatory standards, and only settlements and charges, the industry is at the behest of these agencies. Thus, realizing the fear of Operation Choke Point 2.0, an operation for the government to try and regulate crypto to eventually shut it down.