CoinMetrics co-founder Nic Carter alleged that the U.S. government is using the banking sector to execute a widespread crackdown against the crypto industry.
Nic Carter said in a Jan. 8 guest post for PirateWires that crypto firms are finding it increasingly difficult to obtain access to onshore banking systems due to unfriendly government regulations. Carter said:
“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.”
For context, anti-crypto lawmaker Elizabeth Warren reportedly issued a letter to Silvergate on Dec. 6, reprimanding the firm for providing banking services to FTX.
Barely 24 hours later, the crypto-friendly Signature bank informed its customers that it would shut down their crypto accounts and return their money. As a result, Binance announced that it would only process fiat transactions worth more than $100,000.
In a similar move, Metropolitan Commercial Bank announced a total shutdown of its crypto-related services.
Furthermore, the Federal Reserve reportedly denied crypto bank Custodia’s application to become a member of the Federal Reserve System due to high risk.
From a policy perspective, the Fed, the FDIC, and the OCC released a joint statement on Jan. 3 stating the risks banks face by engaging with crypto firms. Banks were strongly discouraged from doing so, citing “safety and soundness” risks.
Although the authorities did not openly ban banks from dealing with crypto clients, Carter said that the stringent policies and the DOJ’s recent investigations against Silvergate serve as a deterrent to other banks.
Carter further explained that the recent regulatory faceoff with crypto firms could be a resurgence of Operation Choke Point (OCO). In 2013, federal officials used OCO to apply pressure on banks to shut down accounts of businesses they were ideologically opposed to.
As a result, many Poker companies and Payday lenders found out that their bank accounts were terminated with little explanation aside from “regulatory pressure.”
Carter cautioned that if U.S. regulators don’t reconsider their pressure on banks, they risk losing more crypto businesses and U.S. investors to regions with less sophisticated jurisdictions.