Author: Mike Dalton, CryptoSlate; Compiler: Song Xue, Jinse Finance

** The Federal Reserve took action against Farmington State Bank on Aug. 17, alleging that the bank pursued a stablecoin strategy without notifying regulators or obtaining approval. **

The U.S. government agency said it approved Farmington's application to become a bank holding company in 2020 when it imposed certain conditions on the bank and its main shareholder, Jean Chalopin. These conditions prevent banks from changing their business plans and taking certain actions without approval.

**Farmington State Bank allegedly violated these conditions when Farmington State Bank began working with a third party to develop the IT infrastructure for the public stablecoin in 2022. **For some stablecoins, the bank will receive 50% of the minting and burning fees. **

Questionable third parties and stablecoins were not identified in the Fed’s report. However, past announcements have indicated that Farmington State Bank, then operating under the name Moonstone Bank, partnered with Fluent Finance to develop the US+ stablecoin in 2022.

US+ appears to be a fairly small stablecoin, as its reserves data shows it is backed by only $194,286, which is presumably also the amount in circulation.

Farmington State Bank will be closed

Farmington State Bank said on Aug. 17 that it would wind up operations, adding that it had agreed to the Fed's latest order.

**The bank said it would liquidate and wind up business. ** It also said Eastern Oregon Bank would buy its assets and assume its deposits in the deal, and that regulatory filings had been received. Farmington said the deal was scheduled to close on Aug. 31, while the Fed said Farmington signed the purchase agreement on May 12.

Farmington had previously drawn attention in January. At the time, it discontinued its cryptocurrency services and resumed its current role as a community bank. The change also saw the bank change its name from Moonstone Bank to Farmington State Bank.

Reports on Jan. 24 highlighted the bank’s ties to FTX founder Sam Bankman-Fried, whose assets were seized through the bank earlier that month. The Fed's latest action did not acknowledge the assets were seized.