As a seasoned analyst with over two decades of experience in the financial industry and a keen interest in the evolving world of cryptocurrencies, I find myself increasingly intrigued by the ongoing saga between traditional financial institutions and digital asset players. The recent criticism from Ripple’s CTO, David Schwartz, against the Federal Reserve’s actions toward United Texas Bank is yet another chapter that underscores the growing tension between these two worlds.
David Schwartz, the chief technology officer (CTO) at Ripple and one of the architects behind the XRP Ledger and XRP token, has penned a post expressing his criticism towards the Federal Reserve and its chairman, as they imposed penalties on United Texas Bank due to its dealings with cryptocurrency users.
This particular bank belongs to the Federal Reserve System, and they’ve been instructed by the Federal Reserve to halt certain activities through a “stop and desist” directive.
Fed takes dig at Texas bank
David Schwartz made a comment on a post published by Dennis Porter, who is both the president and co-founder of Satoshi Action Fund. He had shared an image of a document, which appeared to be the Federal Reserve’s decision regarding United Texas Bank.
The portion of the document depicted in the screenshot indicates that an examination discovered substantial issues pertaining to foreign correspondent banking and virtual currency clients, particularly in the areas of risk management and adherence to relevant laws, rules, and regulations concerning anti-money laundering (AML), including the Bank Secrecy Act.
“When will it end?” Porter commented.
Ripple CTO bashes Fed for indirect regulation practice with crypto firms
According to Ripple’s Chief Technology Officer, Schwartz, the authorities’ approach to managing the cryptocurrency sector through indirect regulation is disputed. Schwartz characterized this as “an end-around due process” and implored courts to halt such practices carried out by entities like the Federal Reserve and other regulators.
Bypassing due process through indirect regulation is something that should be halted by courts. Instead of the government penalizing digital currency firms directly, they should present a valid argument against them if they wish to impose penalties. However, it’s problematic when the government punishes businesses associated with yours without any justification, as this occurs in indirect regulation.
— David “JoelKatz” Schwartz (@JoelKatz) September 6, 2024
Schwartz clearly expressed that if the U.S. government chooses to penalize cryptocurrency businesses, it should bring charges against them directly. Yet, he added, such an approach would indirectly affect their business associates by punishing them for working with these companies, without taking direct action against the crypto firms – including exchanges and other related entities.
As a crypto investor, I’ve come to realize that, following Schwartz’s analysis, the government seems to be imposing penalties on digital currency firms by denying them potential business partnerships in the future. This action, unfortunately, is often done without providing the standard protections and due process that are typically expected.
As a crypto investor, I’ve been closely watching the ongoing court battle between Ripple and the SEC. Even some members of the US Congress are questioning whether the regulator, led by Gary Gensler, is overstepping its authority. Despite significant victories for Ripple last year and in August 2024, there’s a growing sense that the SEC might appeal this case, making the outcome uncertain.
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2024-09-06 11:11