If someone stated that there was a clandestine plot to fatally impede the crypto industry in the US, being executed by the government and its regulatory authorities, you might conclude that they sounded overly conspiratorial.
However, these ideas are being articulated by a number of well-known figures within the overlapping worlds of crypto, finance and politics, and the case they present is coherent and logically argued.
At the same time, there are commentators who assert that such theories are inaccurate, and the result of joining dots where no true connections actually exist. So, what are the arguments, and what has triggered these unprecedented levels of suspicion?
What Is Operation Choke Point 2.0?
We’ve recently witnessed the failures, in quick succession, of three banks: Silvergate Bank, Silicon Valley Bank, and Signature Bank which were regarded as crypto-friendly. They provided services to crypto companies, or facilitated interaction between crypto and the traditional financial system. Silvergate created the Silvergate Exchange Network (SEN), and Signature had Signet, both of which are mechanisms enabling always-on exchange services between fiat and crypto.
The shutdowns of these banks, then, is an obstacle for crypto, particularly when it comes to integration into the mainstream, which requires reliable and easily accessed fiat on/off ramps. Basically, users need the capacity to convert regular currency into crypto, and vice versa.
And, this is where speculation about underhand strategies from the authorities comes to the fore. The idea is that were regulators, or those instructing them, hostile to crypto, then rather than enacting anything as conspicuously brute-force as an outright ban, they could instead target on/off ramps, along with any other useful banking services, and freeze out crypto through quiet isolation.
In fact, the theory has been laid out clearly by Nic Carter, of crypto-focused venture capital firm Castle Island Ventures. He calls it Operation Choke Point 2.0, and alleges that: “the US government is using the banking sector to organize a sophisticated, widespread crackdown against the crypto industry.” He maintains that: “It includes the [Biden] administration itself, influential members of Congress, the Fed, the FDIC, the OCC, and the DoJ.”
Silvergate, Silicon Valley, and Signature
When Signature Bank was placed into an FDIC receivership by the New York State Department of Financial Services, soon after…
