- Fed targets United Texas Bank for servicing crypto customers.
- Bank was accused of “significant deficiencies” in its adherence to anti-money laundering laws.
- The firm’s management consented to the cease-and-desist order.
United Texas Bank, one of the shrinking cast of domestic lenders still banking crypto firms in the United States, has drawn the ire of the US Federal Reserve.
The Fed slapped the Dallas-based bank with a cease-and-desist order on Wednesday, citing “significant deficiencies” in its adherence to anti-money laundering laws related to the bank’s dealings with crypto customers, among other alleged infringements.
The notice did not detail how the bank’s crypto business wasn’t in compliance with AML regulations.
Still, the order noted the bank’s leadership mutually agreed to consent to the order in place of formal proceedings and has 90 days to submit a five-pronged action plan to ensure proper AML compliance standards.
According to its latest financial report, United Texas Bank has 75 employees and holds about $1 million in total assets.
The notice is the latest instance of a crypto-friendly bank drawing fire from the US central bank.
Customers Bank attracted similar attention from US authorities last month.
In that case, the Pennsylvania-based lender agreed to stringent monitoring by the Federal Reserve over its banking of crypto firms.
Previously, Customers Bank was viewed as the US crypto industry’s preferred bank, a reputation it achieved after it stepped into the void created by the collapse of Signature and Silvergate banks in 2023.
With Signature and Silvergate shut down, US crypto firms have struggled to find other banks willing to accept them as clients.
Many have been forced to consolidate around the few willing lenders ready to accept crypto clients or offshore their businesses.
Crypto companies have historically found banking partnerships difficult in the US.
The situation has only worsened in recent months amid the Fed’s crackdown on the remaining lenders who service crypto firms.
The Federal Deposit Insurance Corporation previously stated that deposits from crypto companies were susceptible to volatility and posed significant liquidity risks to the stability of banks that offer them services.
These enforcement actions have forced one-time crypto-friendly banks to limit their exposure to the sector.
Last year, New York-based Metropolitan Bank, one of the major US crypto-friendly banks with about $210 million in such deposits, began unwinding its crypto business including clients such as exchange giant Crypto.com.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.
