Financial Institutions Could See Increase in Regulatory Clamp-down Over Crypto Services: Morgan Stanley


Financial institutions may face an increase in regulatory pressure if they offer services related to cryptocurrencies, according to a research note from Morgan Stanley (MS) Wednesday.

The move comes after U.S. registered bank Silvergate (SI) announced it would wind down its crypto activities, citing industry and regulatory developments. The decision shuttered an on-ramp for converting fiat currency into crypto in the U.S., and Morgan Stanley said that other avenues may be blocked too.

The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) recently issued a warning to banks to consider liquidity risks associated with cryptocurrencies, a sign of a coordinated effort by regulators to bring the crypto industry under control.

“The lack of on-ramps between fiat and crypto could slow capital inflows into the crypto sector,” wrote analysts Sheena Shah and Kinji C. Steimetz, “and the focus of the market will now be on the actions of rival crypto bank Signature (SBNY), the biggest crypto exchange Binance, and any further regulatory actions related to specific companies or products.”

Additionally, the research note noted that Bitcoin (BTC) has dropped below the important $22,200 technical support level, with the world’s largest cryptocurrency trading around $21,700 at the time of publication.

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