As a seasoned analyst with over two decades of experience in the financial industry and a keen observer of regulatory trends, I find myself increasingly alarmed by the recent revelations surrounding Operation Choke Point 2.0. The allegations that U.S regulators intentionally targeted crypto businesses, such as Silvergate, Signature, and Silicon Valley Bank, are not just concerning; they are downright troubling.
David Sacks, the recently designated White House Advisor on AI and Cryptocurrencies, acknowledged growing concerns regarding the U.S. Securities and Exchange Commission’s (SEC) initiative, Operation Choke Point 2.0. Critics have accused SEC of deliberately cutting off ties with three cryptocurrency companies – Signature, Silvergate, and Silicon Valley Bank – in March 2023.
In response to Chris Lane, who is the son of Silvergate CEO Alan Lane, Sacks emphasized that the claims regarding Operation Choke Point 2.0 should be thoroughly investigated.
There are too many stories of people being hurt by Operation Choke Point 2.0. It needs to be looked at.
— David Sacks (@DavidSacks) December 7, 2024
Background on Operation Choke Point 2.0
In simpler terms, Operation Choke Point 2.0 refers to the current U.S. government’s attempt to limit banking services for cryptocurrency companies. This move is viewed as a renewal or continuation of the original Operation Choke Point from the Obama era, which aimed to control access to financial services for industries considered high-risk, such as payday lenders and gun dealers.
Conversely, some experts contend that compelling banks to discontinue services for crypto-based enterprises could potentially stifle the advancement of the digital currency industry.
David Sacks Responds To Chris Lane’s Post
On December 7, 2024, the recently designated White House AI and Digital Assets Advisor, Mr. Sacks, reacted to a post by Chris Lane, a previous Silvergate CTO. He requested a re-evaluation of Operation Choke Point 2.0 due to its detrimental impact on numerous individuals.
It’s concerning that there are numerous instances where individuals have been harmed due to Operation Choke Point 2.0. A closer examination is warranted.
— David Sacks (@DavidSacks) December 7, 2024
In a recent post on X, Chris Lane voiced his individual perspective regarding the situation at hand. He showed great worry about how government regulations might affect the foundation of crypto-banking systems. He reminisced about Silvergate’s SEN network, which played a crucial role in facilitating cryptocurrency transactions, but has been subjected to sudden regulatory limitations that could jeopardize its sustainability.
He added, “When FTX went down, Silvergate survived a 70% run on deposits. A typical bank cannot survive 20%. FTX didn’t kill us, our regulators did.”
As an analyst, I observed that the regulatory actions significantly hampered our operations, ultimately leading to Silvergate’s downfall. In my analysis, I would describe their predicament as a challenging one, where these regulatory measures played a pivotal role in their decline.
“Regulators pulled a bait and switch – we were walking along and suddenly shot in the back.”
Operation Chokepoint 2.0: A black Spot On the Crypto Industry
Over thirty innovators in the technology and cryptocurrency sectors based in the U.S. have expressed that they’ve been excluded from banking services, allegedly as part of “Operation Chokepoint 2.0.” The concern was brought to light when Marc Andreessen, co-founder of Andreessen Horowitz, discussed it on The Joe Rogan Experience, explaining that numerous tech entrepreneurs were unjustifiably deprived of their bank accounts for political motives.
Additionally, industry representative Andrew Torba asserted that several banks had closed accounts due to regulatory bodies reportedly applying pressure through the threat of audits and regulatory actions.
In light of current events, it has been disclosed that the Federal Deposit Insurance Corporation (FDIC) has collaborated in an attempt to restrict banking services for cryptocurrency-related companies. These findings stem from a court case filed by Coinbase, leading to the release of heavily censored documents.
The FDIC’s correspondence indicated that they asked banks to limit their dealings with companies dealing in cryptocurrencies. However, this directive contrasted earlier statements by regulators claiming they did not force banks to cease providing services to crypto-related customers.
Conclusion
The current state of affairs has sparked worries regarding potential excessive government involvement and its potential consequences. Over the past ten years, the cryptocurrency sector has encountered numerous regulatory challenges, and recent disclosures suggest a prejudiced stance by the government towards this industry.
Read More
- Crypto VC funding roundup: Riot snags over $594m, BVNK raises $50m
- PYTH PREDICTION. PYTH cryptocurrency
- 15 Charged for converting Drug Cartels’ Cash into Cryptocurrency in U.S.
- The Final ‘Gladiator II’ Trailer Has Arrived
- TROTOAR Gallery Bridges Local and Global Art with ‘That’s What’s Up!’
- OREO Unveils Six New Products for 2025
- XRP Price Eyes $2 Support Level Amidst Market Correction
- ‘Fast and Furious’ Star Paul Walker Remembered 11 Years After His Death
- Russell T Davies Says He “Kind Of Hopes” The Streaming Bubble Will “Pop”
- IMX PREDICTION. IMX cryptocurrency
2024-12-07 13:24