The Federal Reserve has issued a cease and desist order to Evolve Bank and Trust, citing "unsafe and unsound banking practices" and inadequate anti-money laundering measures. This move comes amid concerns over the bank's partnerships with fintech firms, particularly in the cryptocurrency sector.

Evolve Bank's Compliance Issues

The bank will be required to present detailed proposals for ensuring compliance with internal and anti-money laundering standards. This directive stems from apparent weaknesses in the bank's collaborations with fintech firms, including a recent debacle with Synapse Financial Technologies. The bank's partnerships with major crypto firms like BlockFi and FTX have also raised concerns, with FTX having about $10 million in Evolve accounts. Additionally, Evolve was used by alleged fraudsters in "pig-butchering" scams, posing compliance and operational risks.

Fed Maintains Rates Amid Evolve Bank Issues

The Federal Reserve has maintained its benchmark federal funds rate at 5.25%, reflecting a conservative stance on economic matters. Federal Reserve Chairman Jerome Powell emphasized the importance of this rate in supporting the U.S. economic recovery, even with decreasing inflation rates. This decision aligns with measures to ensure other financial institutions, like Evolve, operate within acceptable standards of safe and sound banking practices.

The regulatory actions against Evolve coincide with significant legislative discussions on the role of the Federal Reserve. U.S. Congressman Thomas Massie's proposed bill to eliminate the Fed reflects growing sentiment among certain groups advocating for major reforms in the central banking system. This proposal has garnered substantial support from the online Bitcoin community, highlighting ongoing debates over the future of monetary policy and regulation in the United States.