What is Operation Choke Point?
Operation Choke Point was an initiative of the United States Department of Justice beginning in 2013 which investigated banks in the United States and the business they did with firearm dealers, payday lenders, and other companies believed to be at a high risk for fraud and money laundering.
This operation, disclosed in an August 2013 Wall Street Journal story, was officially ended in August 2017, and the FDIC settled multiple lawsuits by promising to Congress additional training for its examiners and to cease issuing "informal" and "unwritten suggestions" to banks.
Critics of the operation accused it of bypassing due process arguing that the government was pressuring the financial industry to cut off companies' access to banking services including access to capital, without first having shown that the targeted companies are violating the law.
So the government fucked around and found out.
Operation Choke Point was a way for government to enforce law and power without actually going through the correct procedure that such actions are supposed to require.
Operation Choke Point has been accused of being harmful to sex workers. Many sex workers have reported having their accounts shut down after years of having accounts. This led to significant financial hardship and is considered a form of discrimination.
If you read the Wikipedia entry in full, you'll see that the entire ordeal was a bit of a shit show. It didn't really accomplish what it was supposed to do, and there were many unforeseen consequences that occurred as the direct result of politicians and government illegally interfering with economic affairs. We should expect nothing less when politics mettles with economics. Who's ready for the CBDC shit show to be begin? Gonna be fun times. Might have to wait a few more years though.
So what is Operation Choke Point 2.0?
It's basically a "conspiracy theory" that government is making moves from the shadows and attacking crypto in a similar way. It's not a baseless conspiracy theory seeing everything going on in the world today, but evidence is certainly lacking when considering definitive and objective answers. There's a lot of speculation going on here, and we can add Signature Bank to the list.
Signature Bank
So it's being claimed that the Feds had very little reason (if any) to shut down Signature bank other than to further this agenda and put another nail in the coffin on the war with crypto. Yeah, sure... it's possible. But the guy saying this, Barney Frank, is also on the bank's board of directors and has an obvious conflict of interest and reason to lie. "It's not our fault! Big bad government did it for no reason!" I'm not sure if I buy it, but if true we should get more details in the days and weeks to come.
Another tin-foil hat theory...
How hard would it be for the Feds to cause a panic by injecting fear into the social circles of crypto bank depositors? Quite easy when you think about it, and it would be very easy to not get caught. Crypto people and startup companies are notoriously fickle and fearful. We've already seen time and time again that such illegal actions are fully within the bounds of the FBI and what they are willing to do. Just something to keep in mind going forward. Not saying it actually happened, but history proves that it is fully within the realm of possibility.
https://blockworks.co/news/operation-choke-point-2-0
Biden’s White House, the Federal Reserve, the OCC, FDIC and the DOJ, alongside “influential members of Congress” are all in cahoots; hell bent on yoinking crypto’s fiat access to suffocate the industry once and for all.
That’s the theory posited by long-time crypto supporter and venture capitalist Nic Carter.
Then, a January joint statement from the FDIC, OCC and Federal Reserve “strongly discouraged” banks from supporting crypto seemed to beget Metropolitan Commercial Bank completely shutting down its crypto-related business lines.
So, when suspiciously Choke-Pointey headlines crop up — like Bybit suspending US dollar deposits, or Circle ceasing automated clearing house payments — it seems logical to draw a line straight to the Feds behind the curtain.
Hmmmm so how's that working out for them?
lol?
Yeah well when the market starts pricing in a bank collapse and a FED pivot, I guess this is the result. The funny thing about demand is that markets are going to be made no matter how much the government attacks the supply. What happens when you make drugs illegal? The cost of them skyrockets on the black market. Duh!
What happens when you make crypto banks illegal? Same thing: you spike the value of crypto. I think people in government may be slow learners. Where supply meets demand: markets are made. Period the end. There are no exceptions, and the demand for crypto is skyrocketing in this environment. It can't be stopped with pesky laws and choke points getting in the way... that just makes it more valuable.
P2P fiat/crypto ramp
If things get bad enough with the legacy financial sector someone is simply going to figure out a way to do better P2P transactions. I still have to write another post on this to further my VENMO API series. There are many platforms out there in which we can piggy back off of the system while avoiding detection. This is the nature of decentralization: it is very hard to track, and even harder to shut down.
The ultimate solution to all of this is vendors simply accepting crypto directly and cutting out the fiat middleman altogether. Unfortunately the chance we can just skip right to this phase is pretty small and we have to built a transition bridge before that happens.
At the end of the day it doesn't really matter how risky it is for a bank to mess around with crypto. The more crypto needs banks, the larger the premium they'll be willing to pay and the higher incentive the bank has to do business with such entities like Coinbase. Let's also not forget that if crypto exchanges get big enough they'll just say "fuck it" and create their own fully regulated bank that they control directly. There are so many paths around this chokepoint it's hard to conclude that it will ever amount to anything long-term.
Conclusion
Is Operation Choke Point 2.0 conspiracy fact? It's hard to say. I'm leaning toward yes, but even if it is a real agenda that still doesn't necessarily imply that Signature Bank was closed down because of it.
The demand for a crypto/fiat ramp is never going to go away, and thus the supply will always be available in some form or another, even if it's a gray-market or even a black-market, supply will always exist given demand for an asset. The only question is how much we have to pay for that service. Low supply means a high premium.
Still, it's hard to worry at the moment when Bitcoin spikes in the middle of a banking crisis. If the FED actually pauses their rate hikes the market will go berserk. I have a feeling such an event is not even close to fully priced in yet even given this big pump that melted the $25k resistance line instantly. I guess we'll be discussing this more in two days when the FOMC meeting ends.