WASHINGTON–The walls are “closing in around crypto,” according to one new report.
Regulators, which to date really haven’t taken much action against many of the industry’s biggest players, are now cutting off access to products and services central to the digital-currency business, according to the Wall Street Journal.
Among the actions being taken are potential lawsuits against Paxos Trust Co., a partner with Binance in issuing coins, and forcing Kraken to stop offering a popular type of crypto-yield product to U.S. investors. “Banking regulators are quietly pushing banks to cut ties with crypto customers, limiting their ability to plug into the real-world financial system,” the Journal reported, adding the activity is coming after years of “slow-moving investigations and debate in Washington over how to best handle the fast-growing industry.”
Many of those interviewed said the collapse of the giant FTX crypto exchange has prompted the shift in Washington and the calls for tougher enforcement.
“It certainly feels, from an industry perspective, like there’s a crypto carpet bombing going on right now,” Kristin Smith, CEO of Blockchain Association, a crypto industry group, told the Journal.
‘Rein in Pillars’
The Journal added that the scope of the actions suggests that the SEC and other regulators want to “rein in pillars” of the crypto market such as stablecoins—digital coins that maintain a price of $1—and staking, a common way for investors to earn interest on their crypto.
“Banking regulators, meanwhile, have signaled a pessimism about whether lending institutions can be safely involved with the industry,” the Journal report added. “Some banks have pared back their involvement with crypto.”
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