Concerns about the US government pressuring banks to avoid dealings with digital assets have recently taken center stage. Several crypto personalities have faced challenges with the traditional banking sector due to the stringent scrutiny from financial regulators.
Ripple’s CEO Brad Garlinghouse recently discussed how the “operation chokepoint 2.0” has affected the relationship between crypto and the banking sector.
Garlinghouse recounted how he lost a critical banking relationship because of his prominent position in crypto.
Citibank Dumped Brad Garlinghouse to Avoid Crypto
US banks fear increased regulatory scrutiny and possible penalties if they continue offering services to crypto customers. As a result, they have severed their relationship with crypto clients.
This has led to a significant challenge as cryptocurrency investors find it difficult to access banking services. At the DC Fintech Week 2024 held in Washington, Brad Garlinghouse recounted his experience.
“Individuals within the crypto industry are being de-banked. I personally have been de-banked,” he said.
The Ripple Chief recounted how the top US banking group, Citigroup Inc., cut him off because of his role in crypto. He had been a Citibank customer for 25 years, but the bank suddenly dumped him because of his crypto involvement.
According to Garlinghouse, the Citibank instance is just one of the personal banking relationships he lost due to his connection with crypto. He related his experience to a broader trend in which the crypto industry struggles to sustain a connection with the banking sector.
This issue escalated because Federal regulators warned financial institutions to curb their dealings with crypto customers. They noted that increased crypto exposure could make the banks susceptible to financial insolvency.
Moreover, the issue with top banks like Silvergate and Silicon Valley Bank has made other institutions wary of accepting new or keeping existing crypto deals. Garlinghouse later revealed how he had to hastily withdraw his funds from Citigank, the most recent institution that cut him off.
“They said, ‘You have five days to move your money,’” he stated. “They were actually super honest. They’re like, ‘Look, you are a notable person in crypto, and having notable people in crypto and banking the crypto industry means more scrutiny from federal regulators,” Garlinghouse added.
Crypto Will Fare Better After Joe Biden’s Administration, Garlinghouse Says
The Ripple CEO criticized US President Joe Biden’s administration and the SEC chair Gary Gensler for leading a “reign of terror.” He said the US Treasury Department and the Office of the Comptroller of the Currency (OCC) are hostile towards the crypto industry.
Further, Garlinghouse believes that the industry will see better crypto policy no matter the outcome of the upcoming US presidential elections.
“No matter what happens, we’re going to see a reset,” he noted.
Brad Garlinghouse said he has taken a neutral stance, not supporting any of the two major US political parties. However, he and his company, Ripple, have made significant financial contributions to support pro-crypto candidates in the 2024 election campaigns.
The Ripple CEO believes that who the next administration appoints at regulatory agencies like the SEC, OCC, CFTC, and Treasury will indicate its crypto stance.
“It’ll be telling as to what the direction of travel is for the next four years,” he said.
However, he believes the future of crypto is bright regardless of who wins the election.
“No matter what, we’re going to end up in a better place. When we look back on this period of time in the United States as it relates to crypto, it’s going to look like a speed bump,” Garlinghouse said.
During his remarks, Garlinghouse was also optimistic that an XRP-based exchange-traded fund (ETF) is inevitable.
