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Understanding Operation Chokepoint and Its Impact on Crypto
Operation Chokepoint, a regulatory initiative aimed at restricting the cryptocurrency industry, has been widely known since the Biden administration’s tenure. The effort focused on cutting off crypto businesses’ access to the banking system, crippling their operations. However, Donald Trump recognized the devastating effects of this policy and vowed to shut it down, ultimately taking concrete steps towards its termination.
What is Operation Chokepoint?
Operation Chokepoint was a coordinated move by government regulators to pressure banks into discontinue services with crypto companies. In 2023, venture capitalist Nic Carter revealed that this was a deliberate attempt to marginalize the crypto industry in the U.S. Regulators effectively urged banks to reject services to crypto firms, severely hindering their operations. Founders such as Tyler Winklevoss, Roman Storm, and Jesse Powell have confirmed being affected by this policy. Notably, Elon Musk disclosed that approximately 30 tech founders secretly lost access to banking services due to this operation.
Banks that refused to comply with these regulatory pressures faced consequences. Silvergate, a formerly crypto-friendly bank, voluntarily liquidated despite being financially stable because regulators ceased allowing it to serve crypto clients. Nic Carter emphasized the shutdown of Silvergate was not caused by financial instability but a direct result of Operation Chokepoint. He highlighted that regulators held the power to arbitrarily end businesses under their jurisdiction, exemplifying the risks of politicized oversight.
The scope of Operation Chokepoint extended beyond the cryptocurrency sphere. Donald Trump revealed during an interview that major banks like JPMorgan and Bank of America rejected his deposits, making him personally aware of these politicized banking practices.
Donald Trump’s Move to End Operation Chokepoint
As president, Donald Trump took action to reverse the effects of Operation Chokepoint. He signed an executive order demanding equal and fair banking access for all Americans, explicitly condemning Operation Chokepoint as a manifestation of undue regulatory influence resulting in unlawful banking restrictions. The order directs federal banking regulators to eliminate references to “reputation risk” or similar concepts from their guidance. This move aims to prevent regulators from using vague criteria to justify politically motivated debanking.
Regulators are required to implement these changes within 180 days following the order, reaffirming the administration’s commitment to restoring a fair banking environment.
Prior to this announcement, the Federal Reserve had already announced the end of reputational risk oversight, demonstrating alignment with Trump’s executive order.
Source: cryptocurrencynews.com
