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The U.S. Government Wants to Cut Off Crypto’s Access to Banks: Nic Carter

The crypto industry may have more and more trouble having access to banking services in the United States.

The U.S. Government Wants to Cut Off Crypto’s Access to Banks: Nic Carter
Photo: Erin Schaff/The New York Times

Key Takeaways

  • Bitcoin advocate Nic Carter believes the U.S. government is trying to cut off crypto from the banking sector.
  • Carter claimed the Biden administration was reviving the Obama-era Operation Choke Point.
  • Carter pointed to 14 different events in the last 10 weeks which hinted at a coordinated strategy to deprive the crypto industry of its off-ramps in the United States.

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Crypto companies may soon find themselves deprived of banking services in the United States, just like online poker was during the Obama era, says Nic Carter.

Operation Choke Point 2.0

Castle Island general partner Nic Carter believes the crypto industry is under attack by the U.S. government.

In a Substack post published yesterday, Carter claimed that the Biden administration was currently “using the banking sector to organize a sophisticated, widespread crackdown against the crypto industry” by discouraging banks from doing business with crypto companies. 

According to Carter, the government’s approach replicates a strategy employed by the Obama administration, named Operation Choke Point, which sought to marginalize specific industries by restricting their access to banking. Impacted industries included the online poker industry, firearms manufacturers, adult entertainers, lotteries, and money transfer networks.

With regards to the crypto space, Carter listed 14 instances in the last 10 weeks in which crypto-friendly banks had faced pressure from the government—or had otherwise elected to stop providing services to crypto companies. He claimed that influential members of Congress, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Department of Justice were implicated in what he called Operation Choke Point 2.0.

Notable among these events were statements made by the Fed, the FDIC, the OCC, and the National Economic Council strongly discouraging banks from holding crypto or dealing with crypto clients on a “safety and soundness” basis. The Fed’s rejection of Custodia’s application to become a member of the Federal Reserve, the DOJ investigation into Silvergate, and Signature and Metropolitan Commercial Bank’s decision to significantly reduce (or completely shut down) their crypto services were also mentioned. 

“Time and again, using the expression ‘safety and soundness,’ [the government has] made it clear that for a bank, touching public blockchains in any way is considered unacceptably risky,” stated Carter, adding that while banks are not explicitly banned from servicing crypto clients, “the writing is on the wall.”

Carter’s words were echoed by Blockchain Association lawyer Jake Chervinsky, who stated on Twitter that federal agencies had “weaponize[d] control over the banking system to mandate discrimination against crypto companies.” 

Disclaimer: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.

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