Operation Choke Point 2.0 Is Underway, And Crypto Is In Its Crosshairs (https://www.piratewires.com/p/crypto-choke-point)
Detailing the Biden Admin's coordinated, ongoing effort across virtually every US financial regulator to deny crypto firms access to banking services
"For crypto firms, obtaining access to the onshore banking system has always been a challenge. Even today, crypto startups struggle mightily to get banks, and only a handful of boutiques serve them.
This is why stablecoins like Tether found popularity early on: to facilitate fiat settlement where the rails of traditional banking were unavailable.
However, in recent weeks, the intensity of efforts to ringfence the entire crypto space and isolate it from the traditional banking system have ratcheted up significantly. Specifically, the Biden administration is now executing what appears to be a coordinated plan that spans multiple agencies to discourage banks from dealing with crypto firms.
It applies to both traditional banks who would serve crypto clients, and crypto-first firms aiming to get bank charters. It includes the administration itself, influential members of Congress, the Fed, the FDIC, the OCC, and the DoJ.
In sum, banks taking deposits from crypto clients, issuing stablecoins, engaging in crypto custody, or seeking to hold crypto as principal have faced nothing short of an onslaught from regulators in recent weeks.
Time and again, using the expression “safety and soundness,” they’ve made it clear that for a bank, touching public blockchains in any way is considered unacceptably risky
Beginning in 2013, Choke Point was a scheme which sought to marginalize specific industries operating legally — not through lawmaking, but by applying pressure via the banking sector.
The Obama DoJ had already cut its teeth with its successful effort to sideline the online poker space in 2011 and 2012 with threats issued to banks supporting poker companies. With Choke Point, the Department decided to scale up its efforts and target other industries, starting with uncontroversial targets like payday lenders.
Then, the DoJ coordinated with the FDIC and OCC to pressure member banks to “redline” — determine as too risky to do business with — certain legal but politically disfavored sectors, chief among them firearms manufacturers and adult entertainment. Banks and payment processors internalized this guidance, and even after the program was formally shuttered under Trump in 2017, its shadow lingered.
Today, banks simply ascribe a higher risk to activities that they suspect might draw the government’s ire, even if no specific guidance exists.
In 2017, Trump and Republican lawmakers like Rep. Luetkemeyer were able to put a stop to Choke Point for a time, but it didn’t last. One of the first moves from Biden’s OCC was to undo Brian Brook’s Fair Access rule that prohibited political discrimination in banking. Biden’s deputies picked up where Obama’s regulators had left off. And now, after the time it took to digest Biden’s Executive Orders, regulators are tightening the screw.
In some key respects, Crypto Choke Point 2.0 differs from the original. It appears that the administration has learned from the efforts of its predecessors.
In Choke Point 1.0, guidance was mainly informal and involved backdoor, off-the-record conversations. Its main tool was the threat of investigation from the DoJ and FDIC if financial institutions didn’t internalize the administration’s risk standards. Because this was patently unconstitutional, it gave Republicans the collateral to ultimately repeal the program.
In 2.0, everything is happening in plain sight, in the form of rulemaking, written guidance, and blogs. The current crypto crackdown is being sold as a “safety and soundness” issue for banks, and not merely a reputational risk issue.
Jake Chervinsky of the Blockchain Association calls it “regulation by blog post.” No need to ask Congress for new laws if federal regulators can simply make policy by publishing guidance which dissuades banks from doing business with crypto."
1) Do you think similar policies will expand to other countries - or continents - outside of the USA?
2) Do you think they will expand to your country?
Or are similar policies in your country already in place?
3) Do you think political authorities' anti-cryptos bias will go away in the next future? Or will get stronger?
What is necessary for them to go away?
Your vote in the poll is much appreciated :D
Do you think similar policies will expand to other countries - or continents - outside of the USA?Yes there is a huge possibility that similar policies will expand outside of the USA.
Do you think they will expand to your country?Yes, what had happened to Binance banning and other exchanges that are not registered here in my country is for me a gesture, a step or a sign that they are already planning for something that might end up a big deal in the future like implementing similar policies here in my country.
Or are similar policies in your country already in place?
Do you think political authorities' anti-cryptos bias will go away in the next future? Or will get stronger?Well that kind of idea don't die but multiply so we will expect more of them in the future. I wish that one day they will see potential with crypto and instead of fighting against it they will partake. I think maintaining the good image of crypto will drive them away as it proved them wrong.
What is necessary for them to go away?
Currently Operation Choke Point 2.0 is going on in the USA: banks are under pressure - just as one year ago - by the authorities to avoid crypto business and to sever ties with crypto businesses.
Currently Operation Choke Point 2.0 is going on in the USA: banks are under pressure - just as one year ago - by the authorities to avoid crypto business and to sever ties with crypto businesses.
Ask any crypto business in the USA how easy it is for them today to make business with a US bank
"1) On Dec. 6, 2022 Senators Elizabeth Warren, John Kennedy, and Roger Marshall send a letter to crypto-friendly bank Silvergate, scolding them for providing services to FTX and Alameda research, and lambasting them for failing to report suspicious activities associated with those clients
2) On Dec. 7 2022, Signature (among the most active banks serving crypto clients) announces its intent to halve deposits ascribed to crypto clients — in other words, they’ll give customers their money back, then shut down their accounts — drawing its crypto deposits down from $23b at peak to $10b, and to exit its stablecoin business
3) On Jan. 3 2023, the Fed, the FDIC, and the OCC release a joint statement on the risks to banks engaging with crypto, not explicitly banning banks’ ability to hold crypto or deal with crypto clients, but strongly discouraging them from doing so on a “safety and soundness” basis
4) On Jan. 9 2023,, Metropolitan Commercial Bank (one of the few banks that serve crypto clients) announces a total shutdown of its cryptoasset-related vertical
5) On Jan. 9 2023,, Silvergate stock falls to a low of $11.55 on bank run and insolvency fears, having traded as high as $160 in March 2022
6) On Jan. 21 2023,, Binance announces that due to policy at Signature bank, they will only process user fiat transactions worth more than $100,000
7) On Jan. 27 2023,, the Federal Reserve denies crypto bank Custodia’s two-year application to become a member of the Federal Reserve system, citing “safety and soundness” risks
8 ) On Jan. 27 2023,, the Kansas City Fed branch denies Custodia’s application for a master account, which would have given it the ability to use wholesale payment services, and to hold reserves with the Fed directly
9) On Jan. 27 2023,, the Fed also issues a policy statement which discourages banks from holding cryptoassets or issuing stablecoins, and broadens their authority to cover non-FDIC insured state-chartered banks (a reaction to Wyoming Special Purpose Depository Institutions (SPDIs) like Custodia, which can hold crypto alongside fiat for its banking customers)
10) On Jan. 27 2023,, the National Economic Council releases a policy statement not explicitly banning banks from serving crypto clients, but strongly discouraging banks from transacting with cryptoassets directly or maintaining exposure to crypto depositors
11) On Feb. 2 2023,, the DoJ’s fraud unit announces an investigation into Silvergate over their dealings with FTX and Alameda
12) On Feb. 6 2023,, Binance suspends USD bank transfers for retail clients (Binance US was not affected)
13) On Feb. 7 2023,, the Jan. 27 Fed statement is entered into the federal register, turning the policy statement into a final rule, with no Congressional review, or public notice-and-comment period
14) As of Feb. 8 2023,, Protego and Paxos’ applications to follow Anchorage and obtain full approval to become National Trust Banks are still outstanding (past the 18 month deadline), and appear likely to be imminently denied by the OCC.
Which one of these measures and statements was withdrawn?
Three Pronged Attack
The American government is currently employing a three pronged attack on the crypto industry in an attempt to suffocate it.
Prong number one makes headlines in most news media and involves the SEC purposefully maintaining vague guidance and attacking companies with lawsuits.
Their behavior has been so egregious that it has drawn dissent from their own ranks and from Congress. The SEC has apparently been tasked to be the Biden administration's Shawshank warden Samuel Norton in obtusely responding to the crypto industry. There really isn't any other way to explain SEC chair Gensler's blatant hypocrisy.
Prong number two has flown under the radar of most news media and involves the revival of Operation Choke Point - an Obama era program that aimed to de-bank lawful industries that the administration disfavored.
The operation was shut down circa 2017, but is now making a comeback targeting the crypto industry.
Cooper & Kirk, a law firm that sued FDIC, OCC & Fed over the original Operation Choke Point, published a detailed summary of Operation Choke Point 2.0.
The third prong involves legislation and executive orders designed to handcuff the crypto industry including increasing taxes on bitcoin miners and regulations.
In 2017, Trump and Republican lawmakers like Rep. Luetkemeyer were able to put a stop to Choke Point for a time, but it didn’t last. One of the first moves from Biden’s OCC was to undo Brian Brook’s Fair Access rule that prohibited political discrimination in banking. Biden’s deputies picked up where Obama’s regulators had left off. And now, after the time it took to digest Biden’s Executive Orders, regulators are tightening the screw.
Here in my country, after years of being lax with cryptocurrency and its many tax issues, seems to me the current administration is now starting to take a look and see which platforms can continue doing business as there can be some that got some presence but have no required license to do so. I am not so sure yet where there is going to as there is no laid out general roadmap for the industry yet...so this remains to be seen.
You mean Binance, because in a few weeks, it will be banned in our country, in this the case the government just wants Cryptocurrency platforms to be compliant and run their business with government regulation because they want to protect their people, so far the taxation is not yet laid out for Cryptocurrency users but if they implement it, then the government want to have control on platforms and users, but yes we'll wait and see what the government are planning now because they cannot ignore Cryptocurrency in our country.When the government tries to regulate cryptocurrency circulation, it will never be able to, but to regulate cryptocurrency platforms such as exchanges that are based in several countries, they will probably have their own financial regulations and must be registered with the government to run smoothly, as is already the case in many countries. which accepts transactions using cryptocurrency, so it is not an important problem to continue to comply with the rules in each country.
You'll Never Believe What Senator Elizabeth Warren Just Did
--snip--
Honestly... I'm confused ... ???
While i doubt authenticate of such news, i don't expect such operation have major impact when smaller bank would continue to accept cryptocurrency activity or business for more profit and customer.
While i doubt authenticate of such news
Custodia is leading a one-bank crypto crusade against the Fed and reviving claims of Operation Chokepoint 2.0
What is sinister is that these people are doing their things silently, not letting the people know what they are doing and the mainstream press is agreeing with them all the way
The SEC has sued many companies in the crypto market: Binance, Coinbase, Ripple, LBRY and Kraken. Because LBRY and Kraken did not have the strong economic potential to pursue the lawsuit against the SEC's accusations, they surrendered. LBRY had to pay $111,614 in May 2023[1], and Kraken also had to pay $30M in February 2023[2].
At that time, many crypto community members did not support Kraken for accepting defeat so easily, but we can also sympathize with Kraken because they could not afford to pay $200M for the lawsuit with the SEC like what Ripple did[3]. Everything seemed fine, until we and Kraken realized the SEC's full ambition, the SEC did not want to stop: The SEC alleges Kraken operates as an unregistered securities exchange, broker, dealer, and clearing agency for certain digital assets in Nov 2023. Obviously, despite receiving $30M, the SEC still wants to exploit Kraken's weakness instead of confronting other rich and strong companies.
This time, Kraken did not disappoint us: Kraken filed a motion to dismiss a lawsuit brought against them by the SEC on February 22, 2024.
Kraken contends that the SEC is overstepping its bounds. Kraken maintains that cryptocurrencies are not securities and that staking programs do not meet the criteria established by the Howey Test, a legal framework used to determine whether an investment qualifies as a security. Kraken argues that the SEC is attempting to regulate the crypto industry through enforcement actions rather than through clear and established rules[4].
If Kraken prevails, it will be a blow to the SEC's attempts to exert control over the crypto market. It could also pave the way for clearer regulations specific to cryptocurrencies, fostering a more stable environment for both businesses and investors. So this time the crypto community did not let Kraken have to fight the SEC alone. The Blockchain Association, a crypto industry advocacy group, has joined the fray by filing an amicus brief in support of Kraken. They argue that the SEC is exceeding its authority and hindering innovation in the crypto space[5].
The SEC has helped the crypto community become more connected, and helped us understand that: we cannot defend ourselves against the SEC by surrendering, the only way for us to survive is to fight together against the SEC's unreasonable accusations against the crypto market.
I am not a Kraken user, but after Kraken's courage, I love Kraken a lot more, similar to the love I have for the giant Ripple, and am willing to use Kraken's services. I will follow this SEC-Kraken lawsuit and wish Kraken victory: all for Kraken, all for the crypto future.
We can begin with this by first starting with countries where crypto regulation is not made easy on the people, these same countries would have something similar to this and are likely not going to take it easy on cryptocurrency users because they feels different way of approach on how the implication of digital currencies affects the economy and encourage for illicit activities, that's why some are being that strict on it, this is not happening yet in my own country, you have the right of choosing the means of payment and currency you desire at your own risk and its not against the law to use bitcoin or any crypto.
How does the forum deal with fake news? (https://www.altcoinstalks.com/index.php?topic=317432.msg1519503#msg1519503)
... Do you have reference links to that bank situation in USA? Like big jornal?