Banking

White House ‘aware of’ stressed crypto friendly bank Silvergate, says press secretary Karine Jean-Pierre

Published

4 weeks ago

March 6, 2023

White House ‘aware of’ stressed crypto friendly bank Silvergate, says press secretary Karine Jean-Pierre Dorian Batycka · 25 mins ago · 2 min read

The comments come as Silvergate suspends crypto payments and shares fall in after hours and weekend trading another -6.4%.

2 min read

Updated: March 6, 2023 at 9:50 pm

Cover art/illustration via CryptoSlate

On March 6, White House Press Secretary Karine Jean-Pierre was pressed on whether the President was monitoring the evolving situation around the stressed crypto-friendly bank Silvergate.

“We won’t comment on Silvergate specifically, but it is obviously only the latest company in the cryptocurrency field to experience significant issues,” the press secretary said.
“In recent weeks, banking regulators have released guidelines on how banks should protect themselves from risks associated with crypto. As you know, this is a president that has repeatedly called on Congress to take action to protect everyday Americans from the risk posted by digital assets.”
“And he will continue to do so. So won’t speak to this particular company as we have not on other cryptocurrency companies. But we’re going to continue monitoring the reports and clearly we’re aware of the situation.”

FTX’s Collapse Leads to Silvergate’s Asset Liquidation

In November of last year, FTX, a popular cryptocurrency exchange, collapsed, leaving outstanding debts of billions to its creditors. One of those creditors was Silvergate, a bank that provided services to FTX. As a result of FTX’s collapse and the subsequent withdrawal of customer deposits, Silvergate was forced to liquidate assets valued at $5.2 billion at the beginning of 2023.

White House’s Stance on Cryptocurrency and Financial Regulation

The White House has been closely monitoring the cryptocurrency industry and its impact on the financial markets. In recent months, there have been calls for increased regulation of cryptocurrencies to prevent events like the collapse of FTX and the resulting fallout for companies like Silvergate.

President Biden’s administration has proposed new regulations that would require cryptocurrency exchanges to report transactions over $10,000 to the Internal Revenue Service (IRS) and impose stricter Know Your Customer (KYC) requirements to prevent money laundering and other illegal activities.

The proposed regulations have been met with both support and opposition from the cryptocurrency community. While some believe increased regulation is necessary to protect consumers and prevent fraud, others argue that it could stifle innovation and harm the growth of the industry.

In September 2022, the White House released the framework for cryptocurrency regulation based on the earlier executive order from President Biden.

The executive order highlights apprehensions regarding digital assets from the Biden administration and their interdependence with the conventional financial market, potentially causing economic instability through contagion effects.

According to the framework:

“The President will evaluate whether to call upon Congress to amend the Bank Secrecy Act, anti-tip-off statutes, and laws against unlicensed money transmitting to apply explicitly to digital asset service providers — including digital asset exchanges and nonfungible token (NFT) platforms.”

Related Topics:Banking Bankruptcy Regulation

Up Next

Alameda seeks to ‘maximize recoveries’ in suing Grayscale over devalued BTC trust; alleges ‘exorbitant’ management fees

Don't Miss

Voyager token rises 11% following firm counter of SEC claim that VGX is a security

Click to comment

adoption

Citigroup believes CBDCs will lead the way to mass adoption

Published

1 day ago

March 30, 2023

Assad Jafri

Citigroup believes CBDCs will lead the way to mass adoption Assad Jafri · 18 hours ago · 2 min read

Citi said that mass adoption will happen when more than a billion people are using blockchain technology without knowing they’re using it.

2 min read

Updated: March 30, 2023 at 6:30 pm

Cover art/illustration via CryptoSlate

U.S. banking giant Citigroup believes that mass adoption is six to eight years away and will be driven by central bank digital currencies (CBDCs) and the tokenization of financial, gaming and real-world assets, according to the lender’s latest blockchain report.

Citi compared blockchain innovation to the early days of gas-powered vehicles or digital cameras and said that the world usually does not recognize the value and benefits of disruptive technologies at first. This factor is compounded by the nature of blockchains, which are a “backend infrastructure technology with no prominent consumer interface,” unlike automobiles and cameras.

However, Citi believes that the mass adoption of blockchain tech will happen in the near future as it starts to establish itself in real-world use cases. Citi said:

“Momentum on adoption has positively shifted as governments, large institutions, and corporations have moved from investigating the benefits of tokenization to trials and proofs of concept.”

Citi’s recipe for mass adoption

According to the research report, mass adoption will happen when more than a billion people are using blockchain technology without knowing they’re using it.

The lender believes this will most likely happen through CBDCs as more and more governments start implementing digital currencies in their economies. As of March, more than 20 central banks plan to issue or have already issued a digital currency — giving almost 2 billion people access to digital money in the coming years.

Citi projected CBDCs to hit a combined market cap of $5 trillion by 2030 in major economies and said that roughly 50% of them would be linked to distributed ledger technology.

Citi noted that CBDCs will allow people to interact and experiment with digital currencies in a relatively secure environment due to state-backing, which is a good thing for the overall adoption of blockchain tech despite most central banks not using it for their CBDCs.

Social media payments and gaming

Citi said that beyond CBDCs, blockchain-based social media payments and the tokenization of gaming assets will play a major role in driving the adoption of blockchain technology among the general public.

Almost every social media platform is currently in the process of enabling digital payments and some — like Telegram and WhatsApp — have made considerable progress.

Telegram recently launched blockchain-based payments for USDT, allowing users to send and receive the stablecoin via messages. The app has been a stalwart proponent of cryptocurrencies and blockchain payments almost since its inception.

Meanwhile, the tokenization of in-game assets is expected to drive adoption among more than 3 billion gamers worldwide. However, web3 games need to be as good as non-web3 games for this to happen, according to the report.

Citi said that gamers don’t care about the technology being used in their games, they only care about the quality of the game and will easily switch to a web3 equivalent of their favorite if one exists. The lender noted that even if only a fraction of the gaming community adopts blockchain-based games it will still result in a significant increase in adoption numbers.

“With over 3 billion gamers worldwide today, we are likely to see nearly 50 million to 100 million adopt games with some element of Web3 or blockchain by 2025.”

Additionally, the lender believes that the tokenization of financial and real-work assets is expected to grow 80x in private markets over the coming years and could also become a significant driver of mass adoption.

Banking

FDIC to sell Signature’s Signet network; remaining bank clients given cutoff date

Published

2 days ago

March 29, 2023

Mike Dalton

FDIC to sell Signature’s Signet network; remaining bank clients given cutoff date Mike Dalton · 3 hours ago · 1 min read

Signature Bank’s closure process continues weeks after its initial failure.

1 min read

Updated: March 29, 2023 at 9:12 pm

Cover art/illustration via CryptoSlate

The Federal Deposit Insurance Corp. (FDIC) aims to sell Signature Bank’s Signet payments network, according to a report from Bloomberg on March 28.

That plan has not been officially announced. Rather, Bloomberg’s report cites a spokesperson who confirmed that the FDIC intends to proceed with the sale.

Previously, on March 19, New York Community Bankcorp and its subsidiary, Flagstar Bank, acquired parts of Signature Bank from the FDIC. However, that acquisition did not extend to certain parts of the company including Signature’s Signet network.

Signet instead remained under the control of the FDIC, which originally took control of Signature Bank on March 13 following the collapse of competing banks.

Certain cryptocurrency companies, including Coinbase, relied on the Signet network at times. The network allowed for faster settlements than some traditional options.

The latest Bloomberg report also indicates that customers who remain with Signature Bank must close their accounts and transfer their money elsewhere by April 5. Customers who do not withdraw their funds by that date will receive a check with their balance.

Access to crypto

Law Firm’s White Paper Claims US Bank Regulators Are Waging A ‘Clandestine Financial War’ Against Crypto Businesses

Published

3 days ago

March 28, 2023

Jamie Redman

Law Firm’s White Paper Claims US Bank Regulators Are Waging A ‘Clandestine Financial War’ Against Crypto Businesses

According to a recent white paper published by four members of the law firm Cooper & Kirk, PLLC, U.S. bank regulators are attempting to “drive crypto businesses out of the financial system.” The paper, titled “Operation Chokepoint 2.0,” claims that after laying the groundwork by labeling lawful businesses as “reputationally risky,” federal bank regulators, with the help of state officials, “turned to the task of purging their accounts from each of the banks subject to their supervision.”

Constitutional Issues Raised by Operation Chokepoint 2.0: Depriving Businesses of Due Process and Key Structural Constitutional Protections

Five days ago, Bitcoin.com News published an article that examines recent discussions in the crypto community regarding “Operation Chokepoint” and why crypto proponents believe the U.S. government aims to eliminate access to cryptocurrencies. On Monday, the Washington D.C. law firm Cooper & Kirk published a white paper on the subject, noting that U.S. bank regulators are ostensibly waging a “clandestine financial war” against the crypto industry.

The paper’s authors, David Thompson, John Ohlendorf, Harold Reeves, and Joseph Masterman, begin by explaining “Operation Chokepoint 1.0” before delving into “Operation Chokepoint 2.0.” The first iteration of the alleged operation began by labeling legal and law-abiding crypto entities as “reputationally risky.”

The second stage of the operation attempts to choke the crypto industry by restricting access to on and off-ramps. According to the Cooper & Kirk paper, “in the back rooms of banks around the country, bank examiners explained that those financial institutions that continued to serve customers that the federal regulators had labeled ‘reputationally risky’ would suffer the consequences.”

The law firm explains that one of the first acts committed was when the Biden administration’s Office of the Comptroller of the Currency (OCC) rescinded a rule designed to “ensure fair access to banking services for several industries—including debt collection—previously cut off during the controversial Obama-era program Operation Chokepoint.”

The Cooper & Kirk authors further detail that the Federal Deposit Insurance Corporation (FDIC) got involved on April 7, 2022. At that time, the FDIC issued a letter to all institutions under its supervision, asking for information concerning their interest in serving the crypto industry and banks that are already engaged with businesses of this nature. Cooper & Kirk’s white paper asserts that Operation Chokepoint 2.0 is unlawful and unconstitutional.

“Operation Choke Point 2.0 deprives businesses of their constitutional rights to due process in violation of the Fifth Amendment,” the paper’s authors explain. “Operation Choke Point 2.0 violates both the non-delegation doctrine and the anti-commandeering doctrine, depriving Americans of key structural constitutional protections against the arbitrary exercise of governmental power.”

The white paper follows the failures of three major U.S. banks that had connections with the crypto industry, as well as commentary from Signature Bank board member and former politician Barney Frank, who suggested that Signature’s seizure was meant to be an “anti-crypto” message.

Tags in this story

Access to crypto, accounts, anti-commandeering doctrine, bank examiners, Banking, Barney Frank, Biden Administration, Bitcoin, Compliance, constitutional protections, Cooper & Kirk, crypto industry, Crypto Proponents, Cryptocurrency, Customers, Due Process, Enforcement, entities, FDIC, federal regulators, Finance, financial system, financial war, Government, industry, institutions, Law, law-abiding, lawful, legal, non-delegation doctrine, OCC, off-ramps, on-ramps, operation chokepoint, purging, Regulation, Reputation, risk, Signature Bank, state officials, supervision, US banks, White Paper

What do you think about the allegations made in the Cooper & Kirk white paper? Do you believe that Operation Chokepoint 2.0 is unconstitutional, and if so, what actions should be taken to protect the rights of crypto businesses? Share your thoughts in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.