TechFlow news, the Federal Reserve has issued a cease-and-desist order to United Texas Bank, a crypto-friendly bank, citing "significant deficiencies" in its risk management systems and operations involving cryptocurrency clients.
A Federal Reserve examination conducted in May identified issues with the bank's corporate governance structure, including "negligence" by the board of directors and senior management.
The primary deficiencies relate to foreign correspondent banking and virtual currency customers, particularly in risk management and compliance with anti-money laundering regulations.
United Texas Bank has taken steps to strengthen its adherence to the Bank Secrecy Act and anti-money laundering programs, and has agreed to submit a formal plan to enhance board oversight. The bank currently employs 75 people and manages approximately $1 billion in assets.
Notably, in August, the Federal Reserve took similar action against another crypto-friendly bank, Customers Bancorp. Dan Spuller, Head of Government Affairs at the Blockchain Association, described this as a continuation of "Operation Choke Point 2.0," suggesting possible government coordination to discourage banks from working with the crypto industry.
