14. April 2024

The Short-Sightedness of Run-Amok Regulators

  • Ric Edelman, founder of the Digital Assets Council of Financial Professionals, talks about a key reason why crypto’s future looks bleaker: an apparent effort to cut it off from U.S. banks.
  • Regulators are trying to kill crypto by forbidding banks from doing business with crypto companies, hindering American innovation and inflicting long-term damage on the U.S economy.
  • Former Congressman Barney Frank has stated that these actions are “inimical to the public interest”.

Regulatory Actions Discouraging Banks

In January, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) issued a joint statement discouraging banks from accepting deposits from crypto companies – taking action without the legally required public input. When banks continued to do business with crypto companies, regulators shut down Silvergate Bank, Signature Bank and Silicon Valley Bank (SVB). The FDIC also excluded $4 billion of deposits held in digital assets businesses when it turned over Signature Bank’s $38.4 billion of deposits to Flagstar Bank.

Barney Frank’s Response

Former Congressman Barney Frank, a driving force behind the Dodd-Frank Act, called these regulatory actions “inimical to the public interest” because they discriminate against digital asset businesses that are operating legally. He noted that many consumers have already been harmed by this decision as evidenced by Silvergate Bank’s recent bankruptcy filing due in large part to its inability to find a new banking partner after being forced out by federal regulators.

Implications for Crypto Community

These regulatory decisions could have far reaching implications for cryptocurrency users around the world as they may lead other banks who were considering offering banking services for digital asset businesses to reconsider their plans due to fear of reprisal from regulators. This would decrease access and increase costs for individuals using cryptocurrencies as well as reduce liquidity in cryptocurrency markets which could further depress prices and reduce demand overall.


It is clear that regulators should take a more balanced approach when it comes to dealing with digital asset businesses rather than punishing them unfairly or arbitrarily restricting their access to banking services like they have done in this case. Doing so will help ensure that everyone has fair access to financial services while protecting investors from harm caused by inadequate regulation or enforcement.