Cross River Bank Faces Consent Order Over Cryptocurrency Business Practices

According to reports, the Federal Deposit Insurance Corporation (FDIC) of the United States has issued a Consent Order to Cross River Bank, which is cryptocurrency friendly, regarding “unsafe or unsound banking practices”. Cross River Bank is a New Jersey regional bank supported by venture capital, conducting business with major cryptocurrency companies such as Coinbase and Circle. Consent orders are an informal procedure commonly used by federal agencies in the United States to handle cases. This 34 page consent order states: “The FDIC has considered this matter and determined that the bank neither acknowledges nor denies the failure to establish and maintain internal controls, information systems, and prudent credit underwriting practices.” The document calls on the Cross River board of directors to strengthen supervision and guidance of management, and take measures to correct any unsafe practices and prevent future violations. The bank is also required to review its information system, identify new credit products, and submit a list of third parties providing these products, as well as other tasks.

Cross River Bank, a crypto friendly bank, faces US FDIC scrutiny

Introduction

The Federal Deposit Insurance Corporation (FDIC) of the United States recently issued a Consent Order to New Jersey regional bank, Cross River Bank, regarding “unsafe or unsound banking practices.” As a bank that is cryptocurrency-friendly and conducts business with major cryptocurrency companies such as Coinbase and Circle, this order has raised concerns within the digital currency community.

Background

Consent orders are an informal procedure commonly used by federal agencies in the United States to handle cases. In the case of Cross River Bank, the consent order consists of a 34-page document stating that “the FDIC has considered this matter and determined that the bank neither acknowledges nor denies the failure to establish and maintain internal controls, information systems, and prudent credit underwriting practices.”

The Consent Order

The consent order calls on the board of directors at Cross River Bank to strengthen supervision and guidance of management, and take measures to correct any unsafe practices and prevent future violations. The bank is also required to review its information system, identify new credit products, and submit a list of third parties providing these products, as well as other tasks.

Possible Implications

It remains to be seen what impact this consent order will have on the cryptocurrency businesses that work with Cross River Bank. Given the bank’s popularity within the cryptocurrency community, it is possible that this could lead to a decline in the popularity of the bank as a preferred banking provider for digital currency businesses. Additionally, it is possible that other banks may face similar consent orders from the FDIC in the future.

How Does This Impact Cryptocurrency Businesses?

This consent order has highlighted the importance of working with banks that have a strong understanding of the cryptocurrency industry and its specific needs. As businesses within the digital currency space continue to grow and mature, it is crucial that they partner with banks that are equipped to handle their unique requirements. This can include not just a comprehensive understanding of digital currencies, but also the necessary internal controls and information systems to ensure compliance with regulatory bodies.

Conclusion

Cross River Bank’s recent consent order is a reminder that businesses within the cryptocurrency industry must partner with banks that are well-equipped to meet their unique needs. As the sector continues to grow, it is important that digital currency businesses work with banks that have a strong understanding of the industry and the regulatory frameworks that govern it.

FAQs

Q: What is a consent order?
A: A consent order is an informal procedure used by federal agencies in the United States to handle cases.
Q: What impact will this consent order have on cryptocurrency businesses?
A: It remains to be seen what impact this consent order will have, but it highlights the importance of working with banks that have a strong understanding of the cryptocurrency industry and its specific needs.
Q: Why is it important for digital currency businesses to work with banks that understand the industry?
A: This ensures compliance with regulatory bodies, as well as the necessary internal controls and information systems to meet the unique needs of the digital currency industry.