Operation Choke Point 2.0 Is Underway, And Crypto Is In Its Crosshairs. By Nic Carter.
What began as a trickle is now a flood: the US government is using the banking sector to organize a sophisticated, widespread crackdown against the crypto industry. And the administration’s efforts are no secret: they’re expressed plainly in memos, regulatory guidance, and blog posts. …
In recent weeks, the intensity of efforts to ringfence the entire crypto space and isolate it from the traditional banking system have ratcheted up significantly. Specifically, the Biden administration is now executing what appears to be a coordinated plan that spans multiple agencies to discourage banks from dealing with crypto firms. …
Time and again, using the expression “safety and soundness,” they’ve made it clear that for a bank, touching public blockchains in any way is considered unacceptably risky. While neither the Fed/ FDIC/ OCC statement — nor the NEC statement a few weeks later — explicitly ban banks from servicing crypto clients, the writing is on the wall, and the investigations into Silvergate are a strong deterrent to any bank considering aligning itself with crypto. What is clear now is that issuing stablecoins or transacting on public blockchains (where they could circulate freely, like cash) is highly discouraged, or effectively prohibited. …
The bigger picture — Operation ChokePoint:
Beginning in 2013, Choke Point was a scheme which sought to marginalize specific industries operating legally — not through lawmaking, but by applying pressure via the banking sector.
The Obama DoJ had already cut its teeth with its successful effort to sideline the online poker space in 2011 and 2012 with threats issued to banks supporting poker companies.
With Choke Point, the Department decided to scale up its efforts and target other industries, starting with uncontroversial targets like payday lenders.
Then, the DoJ coordinated with the FDIC and OCC to pressure member banks to “redline” — determine as too risky to do business with — certain legal but politically disfavored sectors, chief among them firearms manufacturers and adult entertainment.
Banks and payment processors internalized this guidance, and even after the program was formally shuttered under Trump in 2017, its shadow lingered. Today, banks simply ascribe a higher risk to activities that they suspect might draw the government’s ire, even if no specific guidance exists.
Since Choke Point nominally ended, using financial rails as an extra-judicial political cudgel has only become more popular. Under pressure, a number of banks walked away from the Dakota Access Pipeline in 2017. In 2018, Bank of America and Citigroup deplatformed firearms companies, and BoA began to report client firearm purchases to the federal government. …
Financial regulators are being asked to advance progressive causes, too. In 2021, the Democratic House passed the “Federal Reserve Racial and Economic Equity Act,” which would have required the Fed to aim to “eliminate disparities across racial and ethnic groups with respect to employment, income, wealth, and access to affordable credit.” Gensler’s SEC now maintains a controversial climate agenda, as does the Fed (at smaller scale). Kamala Harris has deputized banks to advance a racial equity agenda, effectively imposing uneven demographic standards for credit provision.
Today it’s even commonplace for explicitly conservative organizations like Gab or Parler, and various malcontents and dissidents who fall afoul of regime politics, to find themselves deplatformed from banks, fintech, and payment processors that they rely on to do business
The proper role of government?
For those who support this, I would invite you to imagine what financial inclusion (or exclusion) under a similarly zealous DeSantis administration might look like. …
Using the banks to achieve political goals is easy:
Banks are highly regulated public-private partnerships in an environment where new charters are excruciatingly hard to obtain, and as such remain de facto arms of the state. It has been and remains trivial to deputize them to carry out political objectives.
It’s like using the tech companies:
If there was any doubt, it’s now evident that the Obama administration and its successor in Biden’s regime are comfortable circumventing the First Amendment by engaging nominally private companies to do their dirty work. Anyone paying remote attention would have noticed the oddly close revolving door between monopolistic big tech firms and Obama/ Biden security state officials.
And ever since Elon Musk leaked the Twitter Files, it’s nakedly clear that the US government and its security apparatus used proxies at Twitter for overt censorship and narrative control. Twitter is “just a private company,” though, right?
And thus, by a variety of methods, a radical minority have found a way to govern the majority who disagrees with them — in a nominal democracy!