David Schwartz, Ripple’s CTO, has recently criticized the Federal Reserve for imposing sanctions on United Texas Bank. Schwartz voiced his opposition to the central bank’s decision, stating that this is an unjust way to deal with situations relating to crypto companies.
He made these remarks amid mounting pressure on the cryptocurrency industry from the U.S. authorities.
Ripple CTO Says Put a Stop to Indirect Regulation
David Schwartz expressed his worries after the Federal Reserve decided to require United Texas Bank to stop operating. The Federal Reserve identified weaknesses in the bank’s risk management and anti-money laundering (AML) controls, particularly regarding cryptocurrency transactions.
Dennis Porter, co-founder of Satoshi Action Fund, who shared the Fed’s decision in a tweet, also shared his displeasure saying, “when will this end.” According to Schwartz, these measures are a form of indirect regulation.
Rather than dealing with the issues directly with cryptocurrency companies, the government goes after their business partners. He stated that this way, companies are not afforded the right to due process. He added,
“…when the government punishes your business partners for doing business with you, despite no direct action against you, it punishes you by depriving you of future business relationships…”
Ripple Triumphs Despite SEC Legal Hurdles
The criticism from Ripple’s CTO comes at a time when Ripple is still in a legal dispute with the U.S. Securities and Exchange Commission (SEC). The firm has been in a long-standing legal battle with the SEC, with the agency claiming that Ripple sold unregistered securities in the form of XRP.
However, in the past year, Ripple has gained ground, winning some battles and surpassing legal hurdles. Several members of Congress have expressed concerns over the SEC’s regulatory stance, with some claiming that the agency has gone too far.
Schwartz’s comments shed light on the general discontent in the cryptocurrency market over what some industry players consider predatory regulatory approaches. While Ripple continues its legal battle, the SEC could still appeal the recent court rulings.
