Ripple CTO David Schwartz has published a post criticizing the Federal Reserve and its chairman for actions taken against United Texas Bank over operations with cryptocurrency users. This article examines the details of this event and Schwartz's opinions.
Fed and Texas Bank
The United Texas Bank is a member of the Federal Reserve System, which issued it a 'cease and desist' order. According to a document shared by Dennis Porter, president and co-founder of the Satoshi Action Fund, an examination found 'significant deficiencies related to foreign correspondent banking and virtual currency customers, specifically risk management and compliance with applicable laws, rules, and regulations concerning anti-money laundering (AML), including the Bank Secrecy Act.'
Criticism from Ripple CTO
Citing Porter's tweet, Ripple CTO David Schwartz disagreed with this method of the authorities, calling it 'indirect regulation.' He stated that this is 'an end-run around due process' and urged courts to put a stop to such practices. He noted that if the government wants to punish virtual currency companies, it should make cases against them, instead of punishing their business partners for dealing with them.
Ongoing Ripple and SEC Battle
Meanwhile, Ripple continues to fight against the SEC in court, even though many in the US Congress believe that the regulator and its head, Gary Gensler, are overreaching their powers. After major wins celebrated by Ripple last year and in August 2024, the chances of the SEC appealing the case have increased.
Thus, David Schwartz of Ripple expressed his concerns about the methods of regulating cryptocurrency companies. Questions about the legality of such measures remain open, especially in the context of the ongoing battle between Ripple and the SEC.
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