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Tether adds Bahamas-based private bank Britannia as partner: Report

Tether’s reported new partnership with Britannia Bank makes it the third Bahamas-based bank to join forces with the stablecoin issuer.

Tether, the stablecoin issuer behind USDT, has reportedly added Britannia Bank & Trust, a private bank based in The Bahamas to process dollar transfers on its platform.

It is understood Tether has instructed clients to send money to Britannia’s bank account over the last few months, according to an Aug. 29 report by Bloomberg, citing people familiar with the matter.

However, it isn’t clear when Tether’s banking relationship with Britannia Bank started, but its other reported banking partners include Deltec Bank and Capital Union Bank.

In recent months, United States-based cryptocurrency firms have had to increasingly look offshore for banking partners amid increased scrutiny by U.S. regulators following the shock collapse of FTX in November.

Tether’s unwillingness to publicly disclose the full extent of its balance sheet and banking relationships has also fueled industry FUD (an acronym for fear, uncertainty and doubt) in the past over how the stablecoin issuer stores its $86 billion in assets.

Related: US Fed steps up oversight of banks' involvement with crypto firms

Tether’s USDT currently dominates the stablecoin market, with its $82.9 billion market cap representing 66.5% of the total market, according to CoinGecko.

USDT’s market cap rallied over 20% to $80 billion over the first four months of 2023 — amid the banking crisis involving Silvergate Bank, Signature Bank and Silicon Valley Bank — but has since steadied out around the $80-82 billion since then.

USDT's change in market cap over the last 12 months. Source: CoinGecko

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Digital Asset Traders Withdraw $208,000,000 Worth of Crypto From KuCoin Following Government Charges: Nansen

Warren’s alleged work with short-seller shows anti-crypto army heating up

Elizabeth Warren reportedly took advice from Wall Street short-seller Marc Cohodes, who cashed in on the collapse of Silvergate and Signature banks.

What do progressive Democrats, Republican national security hawks and Wall Street traders have in common? They are all apparently enlisting in United States Senator Elizabeth Warren’s “anti-crypto army.” The progressive senator’s reported alliance with Marc Cohodes, a Wall Street short-seller who profited from the recent carnage at crypto banks, is the latest example. 

Crypto natives likely see the unusual pairing as further proof that entrenched interests are conspiring to kill Web3 in the United States. They aren’t entirely wrong, but America’s polarized factions are uniting against crypto for a reason. The industry has consistently failed to address valid concerns about financial crime and national security. That needs to change, or Warren’s anti-crypto army will continue attracting recruits.

Publicly traded crime scene?

In late 2022, Cohodes circulated a memo on Capitol Hill flagging “existential” regulatory risks at Silvergate, a crypto-friendly bank. The short-seller dubbed the bank a “publicly traded crime scene” and claimed, among other things, that Silvergate had “huge” Know Your Customer (KYC) and Anti-Money Laundering (AML) liabilities. These rules require U.S. financial institutions to carefully due-diligence their customers, and they are rigorously enforced.

​​Related: Elizabeth Warren wants the police at your door in 2024

Cohodes had reason to be concerned. Problems with KYC/AML compliance are rampant in crypto, and Silvergate appears to have been a striking example. According to New York magazine, Silvergate was “the go-to bank for more than a dozen crypto companies that ended up under investigation, shut down, fined, or in bankruptcy,” including FTX, the defunct crypto exchange. Cohodes claimed the bank went so far as to help FTX siphon user deposits into its sister fund, Alameda.

Silvergate shut down after FTX's flameout in March, but its collapse may be symptomatic of serious industry-wide problems. The crypto bank, Cahodes claimed, was “a worldwide money laundering story… with a crypto wrapper.”claimed, was “a worldwide money-laundering story […] with a crypto wrapper.”

Anti-crypto army

Cohodes’ Silvergate memo reportedly found a receptive audience in Warren, who has become one of crypto’s most caustic critics. Unlike her calls for a wealth tax of up to 6% or a “just and equitable cannabis industry,” Warren’s crypto critiques are resonating far beyond progressive circles. Her message is simple: Crypto, Warren says, enables bad actors — from drug traffickers to rogue states — and is a threat to national security.

Related: Elizabeth Warren is pushing the Senate to ban your crypto wallet

Her anti-crypto crusade is gaining traction. In January, three U.S. financial regulators published a joint statement on crypto banking. It heavily echoed Warren’s proposals, effectively laying the groundwork for a regulatory crackdown. The senator is working with Republicans on a bill that would impose strict industrywide KYC requirements. She is even attracting cautious support from banking lobbyists.

The problem isn’t with Warren’s overarching concerns. Web3 should be accountable for filtering out bad actors. It’s that clumsy policy implementation risks damaging the nascent industry irreparably. For example, Warren’s proposed KYC/AML legislation appears to indiscriminately target almost every touchpoint in crypto, including validators. It could severely undermine network decentralization, arguably Web3’s most essential feature.

Crypto should embrace KYC/AML to undermine Warren

Silvergate may have collapsed, but KYC/AML liabilities still permeate Web3. It’s no accident. Anyone familiar with crypto’s cypherpunk origins knows that, for many users, anonymity is a feature, not a bug. Indeed, privacy and self-custody are Web3’s raison d’etre.

It’s a mistake to dismiss crypto as a tool for money laundering. Blockchain’s unique attributes have transformative applications in industries ranging from asset management to media. Unfortunately, they are also setting up the industry for a head-on collision with U.S. regulators.

Web3 isn’t out of options. Emerging technologies are creating new ways to address policy concerns without compromising crypto’s core values. For example, zero-knowledge identity proofs promise seamless on-chain KYC/AML checks that respect users’ privacy. Meanwhile, blockchain intelligence platforms, such as Chainalys have been a boon for financial crime enforcement agencies.

The industry should stop burning political capital on resisting KYC/AML requirements altogether. Instead, we need to start attacking these challenges ourselves — or Warren’s army will. 

Alex O’Donnell is the founder and CEO of Umami Labs and worked as an early contributor to Umami DAO. Prior to Umami Labs, he worked for seven years as a financial journalist at Reuters, where he covered M&As and IPOs.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Digital Asset Traders Withdraw $208,000,000 Worth of Crypto From KuCoin Following Government Charges: Nansen

Stablecoins are a critical countermeasure to Operation Chokepoint

Stablecoins could help crypto firms to remove themselves from the banking system — and prevent the U.S. government from cutting off their financial lifelines.

Boosting financial inclusion is one of crypto’s strongest value propositions. Yet, ironically, the banking crisis has effectively de-banked the crypto industry itself, at least in the United States.

How things panned out with Silvergate, Silicon Valley Bank and Signature — the three crypto-friendly U.S. banks — reeks of what Nic Carter called “Operation Chokepoint 2.0.” There’s good merit to this claim, though naysayers peddle conspiracy theory allegations with much harshness.

Signature, for one, did not face a bank run. The Federal Deposit Insurance Corporation still took the bank over in a jiffy. Anonymous sources even alleged the FDIC had asserted that any purchaser “must agree to give up all the crypto business,” though the agency walked back those claims.

Crypto not only has the resilience but also the tools to fight back — by leveraging stablecoins to minimize bank dependence. Besides solving an immediate crisis, it can also provide the ground to establish crypto as a self-sufficient and parallel financial system. That was Satoshi’s vision, after all.

U.S. regulators are shooting themselves in the foot

There’s a reason why most regulatory authorities — except in some progressive jurisdictions — have their guns blazing for crypto. Their power rests on the toxic relationship between governments, money printers, big corporations and oligopolies disguised as banking systems. The non-intermediated, permissionless and autonomous systems that crypto enables threatens this anti-individual nexus to its very core.

Our journey toward a more equitable, individual-centric world of crypto was never meant to be easy. The hyper-aggressive response from regulators is also pretty much in line with the expectations. But somehow the authorities, especially in the U.S., don’t seem to realize that their actions are self-destructive.

Related: Did regulators intentionally cause a run on banks?

Technological progress has been crucial in taking the U.S. to its current position of dominance in global geopolitics. Emerging crypto-based technologies enabled the next giant leap in this direction. And if only the regulators could overcome their greed for short-term power and control, they would see how stifling innovation isn’t in their best interest.

For instance, the ongoing banking crisis, which is very much due to misguided policy action and selective enforcement, ultimately hurts financial stability in the United States. Moreover, if it’s indeed a coordinated effort to de-bank the crypto industry, the average U.S. taxpayer is bearing most of the brunt, despite staying within legal limits.

Some projects have found a scalable way to assist crypto firms in becoming regulated institutions — such as Archblock, which onboards U.S.-based community banks to expand on-chain “real-world asset” financing for regulated entities.

While this approach might eventually resolve some regulatory tussles, a sizeable section of the global crypto community is rooting for more radical solutions.

Crypto firms don’t need banks when they have stablecoins

Stablecoins have been under much scrutiny since Terra’s “algorithmic” coin, TerraUSD (renamed to TerraClassicUSD, crashed last year, setting off a chain of events that partly led to the FTX fiasco. The crash wiped out an ecosystem worth $40 billion, but it also served valuable lessons in due diligence, overexposure and risk management.

Something like Operation Chokepoint 2.0, actual or hypothetical, is possible because crypto companies and investors use banks as on-ramps or off-ramps. There are practical reasons for this choice: One can’t buy crypto with cash, for example, and must pay with U.S. dollars from their bank account. Even while using an exchange, they need bank transfers to deposit fiat.

Related: The world could be facing a dark future thanks to CBDCs

Involving banks so much isn’t necessary, though. Stablecoins can offer the fiat tokenization services for which crypto companies depend on banks with much risk and despair. The process isn’t decentralized, but neither is banking for that matter. It’s not about decentralization here since the goal is to connect centralized and decentralized finance while minimizing counterparty risks.

Former BitMEX CEO Arthur Hayes published a richly informative blog on the subject in March in which he presented a detailed case for choosing stablecoins over banks. Most importantly, he proposed an innovative stablecoin model, which he called the Satoshi Nakamoto Dollar or NakaDollar (NUSD). The idea is to leverage Bitcoin (BTC) and inverse perpetual swaps such that NUSD doesn’t involve banks in the issuance or redemption process.

Proposals like NUSD are signs of our collective willingness to fight back in the face of regulatory uncertainty and aggressive onslaughts. As crypto evolves, there will be lesser attack surfaces for regulators, and we’ll have more robust alternatives to legacy systems.

Innovation isn’t merely a business model — it’s our biggest strength. And it is through innovation that crypto will overcome all hurdles. The show must go on since future generations deserve a better world.

Sarah Austin is the co-founder of QGlobe Games, a Steam-modeled gaming platform for crypto. She was the founding CMO of Kava Labs, the founding CEO of Pop17.com and the original community builder for Twitch. She graduated from the Dominican University of California before obtaining a data science certification from John Hopkins University.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Digital Asset Traders Withdraw $208,000,000 Worth of Crypto From KuCoin Following Government Charges: Nansen

Former House Rep blames industry outsiders for associating crypto with bank’s failure

According to Barney Frank, Signature Bank’s only issue prior to regulators seizing control in March was “crypto-fear-inaccurate withdrawals."

Barney Frank, a former member of the United States House of Representatives and board member of Signature Bank, has pointed fingers at certain members of the public in the wake of the bank’s collapse.

In a May 30 hearing before the New York State Senate, Frank said he had “no mea culpas” regarding the failure of Signature, claiming that the bank’s dealings with crypto were “safe and sound” prior to regulators stepping in. The former U.S. lawmaker suggested the bank acted as a facilitator for crypto rather than investing directly in digital assets and that some in the public failed to make this distinction.

“It wasn’t that people who were in the digital business themselves panicked; it was other people who didn’t understand the business but were frightened by it,” said Frank on the collapse of Signature. “Unfortunately, a lot of uninsured depositors were hostile to crypto and made the mistaken guilt by association of us and Silicon Valley.”

The New York Department of Financial Services (DFS) took control of Signature Bank in March despite many, including Frank, arguing the firm was not insolvent at the time. The bank’s collapse followed the failure of Silicon Valley Bank and the shutdown of Silvergate Bank, both connected to crypto firms.

Frank added:

“On the day we were shut down — I believe prematurely — our assets were fine, our capital was fine, our loan portfolio was fine. The only problem we had was crypto-fear-inaccurate withdrawals."

Related: ‘Ludicrous’ to think Signature Bank’s collapse was connected to crypto, says NYDFS head

The New York Senate hearing was one of the first at the state level exploring the failure of the crypto-friendly bank. Lawmakers at the federal level convened in March to discuss the events leading to the collapse of Silicon Valley Bank and Signature Bank. Digital assets could arise as a policy issue ahead of the 2024 primaries and elections across the United States.

Financial regulators in New York are often at the forefront of crypto industry-defining policies due to the available capital and businesses setting up shop in the state. Former FTX CEO Sam Bankman-Fried will face his criminal trial in New York starting in October, and DFS has been behind investigations and enforcement actions of several crypto firms since implementing its BitLicense regime in 2015.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Digital Asset Traders Withdraw $208,000,000 Worth of Crypto From KuCoin Following Government Charges: Nansen

Signature Bank Chairman Avoiding Responsibility in $110,000,000,000 Collapse: Senator Cynthia Lummis

Signature Bank Chairman Avoiding Responsibility in 0,000,000,000 Collapse: Senator Cynthia Lummis

Bitcoin (BTC) enthusiast and US Senator Cynthia Lummis is slamming the former chairman of collapsed Signature Bank, alleging that the executive is avoiding taking responsibility for the institution’s demise. In a Senate Banking Committee hearing, the Wyoming Republican tells former Signature Bank chair, Scott Shay, that he and his colleagues may be unfairly “deflecting blame” […]

The post Signature Bank Chairman Avoiding Responsibility in $110,000,000,000 Collapse: Senator Cynthia Lummis appeared first on The Daily Hodl.

Digital Asset Traders Withdraw $208,000,000 Worth of Crypto From KuCoin Following Government Charges: Nansen

FDIC Chair Says Signature Bank Failed To Understand the Risks of Doing Business With Crypto Industry

FDIC Chair Says Signature Bank Failed To Understand the Risks of Doing Business With Crypto Industry

The head of the U.S. Federal Deposit Insurance Corporation (FDIC) says that Signature Bank (SBNY) failed to grasp the risks of doing business with the crypto industry ahead of its collapse. In new testimony before a U.S. Housing of Representatives committee, FDIC chairman Martin Gruenberg says that the crypto industry’s market volatility in the past […]

The post FDIC Chair Says Signature Bank Failed To Understand the Risks of Doing Business With Crypto Industry appeared first on The Daily Hodl.

Digital Asset Traders Withdraw $208,000,000 Worth of Crypto From KuCoin Following Government Charges: Nansen

Louisiana Senator Compares Modern Banks to ‘Sophisticated Ponzi Schemes’

Louisiana Senator Compares Modern Banks to ‘Sophisticated Ponzi Schemes’Louisiana Republican senator John Kennedy recently stated in an interview published on Wednesday that the U.S. Federal Reserve may need to increase the federal funds rate to 8-10% to address the country’s inflationary pressures. Kennedy’s remarks come after he criticized the Biden administration in mid-March for bailing out Silicon Valley Bank and Signature Bank, emphasizing […]

Digital Asset Traders Withdraw $208,000,000 Worth of Crypto From KuCoin Following Government Charges: Nansen

US regional bank shares sink despite Fed calling banking system ‘sound’

PacWest Bancorp was the hardest hit bank after-hours on Wednesday, falling over 50% following a reported plan to explore strategic options.

Share prices of several United States regional banks tanked in after-hours trading Wednesday, despite Federal Reserve Chairman Jerome Powell calling the banking sector “sound” and “resilient" just hours before.

One such regional bank, PacWest Bancorp, fell a whopping 52.5% in after-hours trading after Bloomberg reported that the bank would explore strategic options on May 4. It has been seen by some as another bank to potentially fall amid a U.S. banking crisis

The bank is reportedly considering a sale or capital raising, Bloomberg said, citing people familiar with the matter.

The share price of PacWest fell over 50% after hours on Wednesday. Source: Google Finance

Meanwhile, Western Alliance Bancorp (22.4%), Metropolitan Bank (16.2%) and HomeStreet (7.8%) were among the other hardest-hit regional banks.

Metropolitan Bank once offered services to crypto firms but closed its digital asset vertical in January because the firm wasn’t content with how the cryptocurrency industry was developing.

Western Alliance Bancorp also integrated blockchain-based payment solutions for its client base from the firm’s blockchain and digital asset branch.

Powell's attempt to quell concerns about the banking sector came as he announced that the Federal Reserve would hike interest rates another 25 base points:

“Conditions in [the banking] sector have broadly improved since early March and the U.S. banking system is sound and resilient. We will continue to monitor conditions in the sector. 

Powell added they are "committed to learning the right lessons from this episode," and we’ll work to prevent events like these from happening again.”

First Republic Bank’s collapse was the second biggest bank failure of late, which first surfaced on April 26 when the news about a government receivership broke out, causing the bank’s share price to plummet 20% in hours.

Several members on Crypto Twitter have mocked Powell for stating that conditions in the banking sector “have broadly improved” since early March.

Related: The Fed has little ammo left as $30K Bitcoin price becomes key battle line

Will Clemente, the founder of digital asset analysis firm Reflexivity Research, mocked Powell to his 680,300 Twitter followers by stating the collapse of now five banks — SVB, Silvergate, Signature, First Republic and PacWest — “sounds like a very sound and resilient banking system…”

Twitter user, “zerohedge” made fun of Powell by noting to its 1.6 million followers that over $500 billion has been wiped out from “bank failures” in the past month alone.

PacWest Bancorp’s 52% fall is set to wipe out about $340 million from its market cap, which was $772 million at Wednesday’s close, according to Google Finance.

Magazine: Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Digital Asset Traders Withdraw $208,000,000 Worth of Crypto From KuCoin Following Government Charges: Nansen

JPMorgan Chase Assumes Control of First Republic Bank Following Seizure by California Regulators

JPMorgan Chase Assumes Control of First Republic Bank Following Seizure by California RegulatorsOn May 1, 2023, the California Department of Financial Protection and Innovation (DFPI) seized First Republic Bank, placing it into Federal Deposit Insurance Corporation (FDIC) receivership. According to reports, this move came after the bank’s financial troubles made it insolvent and unable to meet its obligations. Following the seizure, JPMorgan Chase submitted the winning bid […]

Digital Asset Traders Withdraw $208,000,000 Worth of Crypto From KuCoin Following Government Charges: Nansen

Reports by Fed and FDIC Reveal Vulnerabilities Behind 2 Major US Bank Failures

Reports by Fed and FDIC Reveal Vulnerabilities Behind 2 Major US Bank FailuresOn Friday, Michael Barr, the vice chair for supervision at the U.S. Federal Reserve, published a report on the vulnerabilities that led to the ultimate failure of Silicon Valley Bank (SVB). In addition, Marshall Gentry, the chief risk officer of the Federal Deposit Insurance Corporation (FDIC), released a similar report on Signature Bank’s collapse and […]

Digital Asset Traders Withdraw $208,000,000 Worth of Crypto From KuCoin Following Government Charges: Nansen