Operation Choke Point 2.0 — the Biden Administration’s highly coordinated plan with regulators to strangle the crypto industry by cutting ties with the banking sector is “real,” with sufficient evidence supporting it. CoinGape earlier reported that crypto-friendly banks such as Silvergate Bank, Signature Bank, and Metropolitan Commercial Bank would be the early targets of regulators to de-bank the crypto industry.
The collapse of Silvergate, Silicon Valley Bank, and Signature Bank was encouraged by the U.S. government and not because of crypto. While the banks provided services to some crypto clients, the reasons behind the closure of banks have nothing to do with crypto.
Silvergate’s early repayment of Federal Home Loan Bank of San Francisco loans through the sale of securities, Silicon Valley Bank’s mismanaging risk by putting customer deposits in long-dated securities and mortgage-backed securities, and Signature Bank’s forced shutdown by state regulators are the primary reasons behind the closures.
Reuters reported that regulators such as U.S. Fed and FDIC have asked banks to submit bids for acquiring Silicon Valley Bank and Signature Bank by March 17. The condition — any buyer must agree to give up all the crypto business.
Meanwhile, some blame crypto for causing a banking crisis and contagion spreading to other regions such as Europe. Credit Suisse’s financial issues date back to 2021 and banks exposed to Credit Suisse and SVB such as BNP Paribas are also under pressure. Credit Suisse has received $54 billion from the Swiss central bank, with shares recovering from downfall before the rate hike decision by the ECB.
Crypto Questions Regulators for Operation Choke Point 2.0
Crypto leaders such as Nic Carter, Cathie Wood, Elon Musk, Arthur Hayes, and CZ have questioned the crypto crackdown by the regulators. Ark Invest CEO Cathie Wood said crypto had nothing to do with the banks’ investment decisions, nor the Fed’s decision to increase interest rates 19-fold in less than a year. Crypto will move offshore, depriving the U.S. of blockchain and crypto innovations.
Congressman Tom Emmer wrote a letter to the FDIC chairman Gruenberg seeking answers to weaponizing the current instability in the banking sector to choke legal crypto activity in the U.S. He blames the government for making the strategy that could have a “disastrous effect” on American customers if the industry moves offshore.
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