If crypto is going to enter the US banking system or merely survive as a financial instrument, it will have to be regulated. Without regulation, the cesspool of frauds, ponzi schemes, money laundering, and other illegal activities enabled by crypto will continue. How can US banks be involved with crypto and still be compliant with BSA, AML, FinCEN, and the myriad of other regulations? With the volatility and risks associated with crypto, how can US banks, insured by the FDIC, be involved with crypto and comply with safe and sound banking practices requirements?
It is shocking how the government or regulators have allowed crypto to operate in its current state this long provided crypto is a known financial vehicle to facilitate illegal and criminal activities. If all crypto became worthless, what would the hackers or scammers ask ransomware victims to provide? Gift cards and other means to transfer financial resources to criminals are challenging to scale to the significant dollar amounts achieved via crypto. Crypto is the backbone of the annual $10.5 trillion dollar cybercrime "industry."
Crypto and the underlying blockchain technology are viable, revolutionary concepts. However, the manner in which crypto currently operates is contradictory to controls in financial systems designed to hinder criminal activity and protection of the general public.
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Matt Johnson
CFO
Premier Bank
Omaha, NE
Posts reflect my personal opinion and do not represent any organization in which I am affiliated.
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Original Message:
Sent: 03-06-2023 15:11
From: Rob Blackwell
Subject: Tuesday Topic: Where does crypto go from here?
There have been a lot of negative stories for crypto in recent days. Silvergate, the crypto bank in California known for its ties to the crypto industry, is struggling as partners distance themselves and the bank itself warns it could soon be less than well-capitalized. Tether, meanwhile, is facing new questions over whether the stablecoin company faked documents and obscured identities to get banking access.
Thus far in 2023, regulators have responded with a bevy of fines, penalties, and policy statements that appear calculated to keep crypto out of the traditional banking system, and by extension, mainstream finance.
So what happens now? I've hosted a number of prominent guests on Banking with Interest who've assured me that, despite the crackdown, crypto isn't going away. Bitcoin is still trading at over $20,000 at the time of writing, despite the "crypto winter" of 2022, FTX's collapse, and Silvergate's woes. That is a far cry from its peak of over $65,000 in 2021, but remember that when Silvergate first got into crypto in 2014, bitcoin was trading at just over $300.
So will bitcoin go to zero or rebound from here? That's not yet clear, but one thing we do know is that to function effectively, crypto needs banks. If crypto firms can't access U.S. banks, or if it's not worth it to do so, will the market flourish overseas? And is the U.S. okay with that? Or will legislation-which once seemed to be on the fast-track but now has slowed considerably-to create a more comprehensive regulatory framework for crypto provide some clarity here? I'd love to hear predictions from the group.
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Rob Blackwell
Chief Content Officer and Head of External Affairs
IntraFi
Arlington, VA
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