Custodia Bank reduces its personnel by 25% in response to Joe Biden‘s crypto crackdown, citing regulatory pressures and legal disputes with the Federal Reserve.
Custodia Bank has announced layoffs due to financial pressures associated with the regulatory posture of the Obama administration on digital assets, which is attributed to Joe Biden. The bank will reduce its personnel by 25%, eliminating nine positions out of 36, in response to the legal challenges it is currently facing in its legal dispute with the Federal Reserve and the implementation of harsh crypto regulations.
Custodia Bank Reduces Employment in Response to Biden’s Cryptocurrency Crackdown
According to Fox Business, Custodia Bank, a crypto-friendly bank, has announced the layoff of nine employees, which accounts for 25% of its personnel. The bank’s decision is made in the context of its ongoing efforts to obtain a master account from the Federal Reserve, a requisite for its operations.
The bank is compelled to conduct business through other institutions without this account, which increases costs. The bank’s legal battle against the Federal Reserve is ongoing, and the redundancies are a component of its efforts to preserve capital.
The bank has attributed the necessity of these redundancies to the Biden administration’s increased regulatory scrutiny of the crypto industry. The CEO of Custodia Bank, Caitlin Long, has identified what the industry has termed “Operation Chokepoint 2.0” as a coordinated effort by the federal government to isolate crypto businesses from the traditional banking system.
The crypto-friendly bank has maintained that its operations will continue as usual, and the recent developments will not affect its ongoing lawsuit against the Federal Reserve despite the redundancies.
Regulatory Pressures During the Biden Administration
Federal agencies, such as the Federal Reserve, have implemented more stringent regulations regarding cryptocurrency during the Joe Biden administration. Traditional banks have been advised against conducting business with crypto firms due to digital assets’ regulatory uncertainties and volatility.
Subsequently, this has resulted in a challenging environment for crypto-focused institutions such as Custodia Bank, which have encountered an increasingly difficult time obtaining essential banking services.
Deputy Treasury Secretary Wally Adeyemo recently refuted the existence of a coordinated effort to undermine the crypto industry. Nevertheless, reports indicate that their bank accounts have been terminated due to their involvement in cryptocurrency.
This regulatory environment has consequently influenced lesser institutions, compelling them to implement drastic measures, such as layoffs, to remain solvent.
What is Donald Trump’s Stand on Crypto Regulations?
Donald Trump, the former president, has established himself as a pro-crypto candidate in the forthcoming presidential election, as Custodia Bank and other crypto-related businesses encounter regulatory obstacles. Trump, who previously expressed his disapproval of cryptocurrencies, has since become an advocate for the sector. He has pledged to establish the United States as a global leader in cryptocurrency and has suggested that regulations may be relaxed if he is elected.
Furthermore, Eric Trump, the son of President Trump, has initiated the development of a new initiative known as World Liberty Financial in the cryptocurrency world. This initiative aims to offer financial services that are not part of the conventional banking system.
This includes the potential to offer loans based on decentralized finance principles (DeFi). Eric Trump has expressed his enthusiasm for the project, positing that it has the potential to transform how financial services are accessed in the United States.
As a result, Donald Trump’s most recent statements indicate that his administration would adopt a more favorable posture toward the crypto industry, starkly contrasting the current regulatory approach under the Joe Biden administration. This has piqued the interest of crypto enthusiasts, who perceive Trump as a potential ally in their struggle against restrictive regulations.
