Apr 30, 2023
FDIC Requests Cross River Bank to “Self-Correct” Weaknesses
The Federal Deposit Insurance Corporation (FDIC) has requested that Cross River Bank – known for its services to fintech and crypto firms like Visa and Coinbase – to “self-correct” and appropriately address weaknesses in its lending activities.
On March 8, the FDIC executed a consent order with Cross River Bank, alleging that the bank had engaged in “unsafe” or “unsound” banking practices in regard to its compliance with applicable fair lending laws and regulations in 2021.
The FDIC’s order requires Cross River Bank to immediately take action to increase its supervision over the “system of internal controls, information systems, credit underwriting practises, and internal audit systems related to the consumer protection laws and regulations.”
The bank must also “self-correct” any violations of fair lending laws, as well as create processes to ensure these weaknesses don’t appear in future.
The FDIC requested that Cross River fully comply with the consent order in a “timely manner.”
Gilles Gades, Cross River’s CEO, released a statement on April 27, without any mention to the FDIC allegations. Gades emphasized that regulatory scrutiny on banks is increasing, suggesting that Cross River takes adequate measures to ensure “transparency, and responsibility.”
“Cross River is the largest of these banking institutions and as such, we have regulatory examiners reviewing some elements of our business on a continuous basis” Gades stated.
“We view our compliance capability as a strategic advantage and are proud to lead our industry in maintaining the highest levels of compliance, transparency, and responsibility” he wrote.
The order was executed with the bank only days before Circle, the stablecoin issuer behind USD Coin (USDC), partnered with Cross River for banking services – which was announced on March 13.
Circle had sought the new partnership, after its previous provider, Silicon Valley Bank, collapsed on March 11.
The FDIC’s order is an indication that the agency is taking a closer look at the financial activities of crypto and fintech firms. It is also a reminder that banks must be prepared to comply with the necessary regulations and policies to ensure the safety of their customers.
The need for businesses to be aware of the latest regulations has never been greater, especially when it comes to selling NFTs, NFT promotion, and NFT marketing. This is why many crypto and web3 agencies are turning to NFT marketing agencies to help them navigate the complexities of the web3 space.
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Ultimately, the FDIC’s order is a reminder that businesses must be aware of the latest regulations, and take the necessary steps to ensure they are compliant. Working with a web3 agency that specializes in NFT marketing is a great way to stay ahead of the game.
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