Ex-Obama Solicitor Accuses Regulators of Intentional Crypto Debanking

UTC by Mayowa Adebajo · 3 min read
Ex-Obama Solicitor Accuses Regulators of Intentional Crypto Debanking
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The digital currency ecosystem remains tightly constrained by the US SEC.

Donald B. Verrilli, the Solicitor General during the Obama Administration, has aired his opinion about the current state of crypto regulation in the United States. Though now associated with Grayscale Investments, Verrilli is no newcomer to regulations. Therefore, his opinions, laced with a good amount of experience, may come in handy as the regulatory scene in the US becomes increasingly challenging for the crypto industry.

Fox Business journalist Eleanor Terrett recently shared Verrilli’s perspective, referencing the ongoing legal battle between Custodia Bank and the Federal Reserve. The dispute borders around the Federal Reserve’s refusal to issue a Master Account to Custodia Bank, a decision that has far-reaching implications for the broader crypto industry. Although the immediate ruling came in favor of the Federal Reserve, the case is definitely not yet over.

Allegations of Deliberate Debanking of Crypto by Regulators

Voicing his concerns, Verrilli suggests that the United States Office of the Comptroller of Currency (OCC) may have played a major role in what led to this regulatory crossroad. In a joint communiqué issued with Paul Clement, Solicitor General under President Bush, the duo revealed that the OCC issued informal guidance that effectively limits banks’ ability to engage with crypto firms. Despite being labelled as informal, this guidance presents rather unrealistic requirements for banks wishing to do business in the fast-growing crypto industry.

Notably, the intervention by Verrilli and Clement is an indicator that the tides are changing. More so, in terms of political inclination toward crypto regulation. Terrett did note that despite their previous clashes in Supreme Court cases, Verrilli and Clement are now united in their critique of the current regulatory environment.

So worrisome has the regulatory environment become that market analysts suggest that the United States risks falling behind in the global crypto market unless it adopts a more forward-thinking approach to its regulations.

Crypto Industry Unites

The digital currency ecosystem remains tightly constrained by the United States Securities and Exchange Commission (SEC). That is, in recognition of the various lawsuits and counter-lawsuits flying around.

Verrilli and Clement noted the ongoing legal challenges faced by major crypto exchanges, highlighting the high-profile lawsuit filed by Coinbase against the SEC and the Federal Deposit Insurance Corporation (FDIC).

Despite the fact that Coinbase has put up an appreciable amount of fight thus far, the SEC has not backed down from pursuing legal action against leading firms in the industry. Ripple Labs, Uniswap, and more recently ConsenSys are among the companies currently at loggerheads with the regulator. These actions have led to an unexpected unity within the crypto community.  That is, as firms and advocates come out in one voice to defend the industry’s future.

Another interesting part of the whole saga is that the crypto ecosystem might already be mobilizing politically. There is a growing coalition within the crypto community aiming to influence the upcoming US elections by supporting lawmakers who have shown themselves to be associated with crypto. This strategic push is designed to ensure that more pro-crypto representatives secure seats in Washington DC, ultimately preparing the grounds for more favorable regulatory conditions in the future.

Cryptocurrency News, News
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