Flock to Bitcoin: New York City Limits Deposits at Capital One and KeyBank
The New York City Banking Commission has decided to limit deposits for two banks as the U.S. banking crisis deepens. Can Bitcoin ‘fix this?’
On May 25, the New York City Comptroller, the City Mayor, and the Department of Finance voted to limit deposits at Capital One and KeyBank.
The move comes after the banks “failed to submit required plans demonstrating their efforts to root out discrimination,” according to the Comptroller.
It is the latest blow to the U.S. banking system, which has been under immense pressure this year.
New York City Banking Crackdown
In addition to the crackdown on these two banks, three others were voted against. New York City Comptroller Brad Lander voted against designating International Finance Bank, PNC Bank, and Wells Fargo from holding public funds.
“Banks seeking to do business with New York City must demonstrate that they will be responsible managers of public funds and responsible actors in our communities,” he said.
Five banks had failed to comply with New York City Banking Commission’s stringent regulations. However, the Commission did approve 26 other depository banks in the state for two years.
Banks must file certificates concerning their policies of non-discrimination in hiring, promotion, and delivery of banking services to operate in New York.
Moreover, the two banks with frozen deposits were not small fry. Capital One held $7.2 million in City deposits at the end of April across 108 accounts. KeyBank held $10 million in City deposits at the end of April.
This year’s collapses of Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank have roiled the banking sector. The Federal Reserve responded with emergency loans to distressed banks, hinting that rate hikes could be over soon.
There are rumblings that two more U.S. banks, PacWest and Western Alliance, might be the next to fall.
Furthermore, America’s largest bank, JP Morgan Chase, is slashing around a thousand jobs at First Republic Bank after buying the failed firm this month.
Research also suggests that as many as half of the banks in America could be insolvent.
Is Bitcoin The Answer?
Crypto proponents will argue that Bitcoin is the solution to all of this banking bunkum. However, it still relies on fiat on and off-ramps, which means involving banks.
For this reason, most retail banks and nearly every central bank are against Bitcoin and crypto. It was spawned from the 2008 bank-induced financial crisis and remains the biggest threat to banks.
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