Customers Bank, one of the few crypto-friendly banks in the USA, has received a warning from the Federal Reserve. The Fed is concerned about how the bank manages risks and fights money laundering. This is significant because Customers Bank plays an important role in supporting digital asset companies.
The Federal Reserve oversees the U.S. banking system and is not happy with Customers Bank’s practices. About one-sixth of the bank’s funds come from the cryptocurrency market, and after the announcement, its stock price crashed by over 13%.
Customers Bank has developed a payment system called the Customers Bank Instant Token (CBIT), allowing users to make payments in U.S. dollars anytime. However, this close connection to crypto has led to increased scrutiny from financial watchdogs.
Although the Federal Reserve has not imposed any penalties yet but has given the bank 60 days to fix the identified issues. They also ordered that Customers Bank must present a detailed plan to improve its risk management and money laundering prevention. If it fails to comply, tougher penalties could follow.
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This warning comes at a time when other crypto-friendly banks, like Silvergate and Signature, have also faced challenges in the last two years.
Impact on Crypto Adoption in the U.S.
The warning to Customers Bank could create problems for the future of cryptocurrency & Cryptocurrency adoption in the U.S. Other banks may hesitate to work with crypto firms due to regulatory pressure, which could limit banking services for the crypto space. If banks become less willing to support crypto, it could slow down the growth and adoption of cryptocurrency in the country.
Read also: OKX CEO Warns: Accounts Linked to Tornado Cash and Sanctioned Entities Face Immediate Closure
Customers Bank Warned by Federal Reserve Over Crypto Risks
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