- Fed targets United Texas Bank for its services to crypto customers.
- The bank has been accused of “significant failures” in its compliance with anti-money laundering laws.
- The company’s management consented to the cease and desist order.
United Texas Bank, one of the few national lenders still funding cryptocurrency companies in the United States, has drawn the ire of the U.S. Federal Reserve.
The Fed issued a cease-and-desist order against the Dallas-based bank on Wednesday, citing “significant deficiencies” in its compliance with anti-money laundering laws related to the bank’s transactions with crypto clients, among other alleged violations.
The notice did not specify how the bank’s crypto activity was not in compliance with AML regulations.
However, the order notes that the bank’s executives have mutually agreed to consent to the order in lieu of formal proceedings and have 90 days to submit a five-part action plan to ensure appropriate AML compliance standards.
According to its latest financial report, United Texas Bank has 75 employees and holds approximately $1 million in total assets.
The notice is the latest example of a cryptocurrency-friendly bank drawing the ire of the U.S. central bank.
Customers Bank attracted similar attention from U.S. authorities last month.
In that case, the Pennsylvania-based lender agreed to strict oversight from the Federal Reserve over its banking activities with crypto firms.
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Previously, Customers Bank was considered the preferred bank of the US crypto industry, a reputation it earned after filling the void created by the collapse of Signature and Silvergate banks in 2023.
With the closure of Signature and Silvergate, U.S. cryptocurrency businesses have struggled to find other banks willing to accept them as clients.
Many have been forced to consolidate around the few lenders willing to accept crypto clients or relocate their operations.
Cryptocurrency companies have historically struggled to establish banking partnerships in the United States.
The situation has only worsened in recent months due to the Fed’s crackdown on remaining lenders that provide services to cryptocurrency businesses.
The Federal Deposit Insurance Corporation has previously said that deposits from cryptocurrency companies are susceptible to volatility and pose significant liquidity risks to the stability of the banks that serve them.
These enforcement actions have forced once-cryptocurrency-friendly banks to limit their exposure to the sector.
Last year, New York-based Metropolitan Bank, one of the largest U.S. crypto-friendly banks with about $210 million in such deposits, began liquidating its cryptocurrency businesses, including clients such as exchange giant Crypto.com.
Osato Avan-Nomayo is our DeFi correspondent based in Nigeria. He covers DeFi and technology. To share tips or information on articles, please contact him at osato@dlnews.com.
