Operation Choke Point
Almost a decade ago, Obama’s Justice Department made it hard for politically incorrect (aka non-woke) businesses to obtain banking services – think guns, online gambling, payday lending, fireworks, dating services – despite these businesses being entirely “legal.” The code name for this movement was Operation Choke Point. It labeled these types of businesses as “risky,” rather than the implied term “unwanted.”
Several lawsuits were brought against the FDIC for these practices. They ultimately capitulated in 2018 after the start of the Trump administration. FDIC personnel underwent additional training to prevent them from exerting informal pressure on banking relationships.
Operation Choke Point 2.0
When Signature Bank was shut down, it raised suspicions that Operation Choke Point 2.0 was in the works. This time, the intended target is crypto.
Now many believe that these suspicions have been confirmed by the release of the new Economic Report of the President. This report devotes a significant number of pages to debunking crypto, blockchain, and web3.0 in all its forms. Even the timing of the report’s release with respect to Silvergate Capital and Signature Bank collapse seems to confirm that Operation Choke Point has been revived.
It seems clear that the door is closing on the US government’s willingness to support (or even interact) with the cryptoverse. Everyone in the tech world has seen this report by now and many have tweeted their displeasure, including Fred Ehrsam the co-founder of Coinbase.
Is the government being hypocritical?
The Fed and the “traditional banking system” have weathered recent earthquakes The runs on Silicon Valley Bank and First Republic required a US government bailout. These “bank failures” spooked the markets all across the globe and triggered a buyout of Credit Suisse by UBS. In reality, the blame for these failures falls with the Fed, whose increasing interest rates ensure that previously “safe long-term investments” were now actually losing money.
The US government’s stance on all aspects of the economy right now is confusing. Are the funds in traditional bank accounts actually “safe” when only $250,000 of a $40,000,000 deposit is insured by the FDIC? Are funds actually safe within the traditional banking system when a the bank is allowed to “loan,” or “invest” upwards of 90% of the funds into illiquid states? Should the Fed continue to increase interest rates despite triggering several major bank failures? And let’s be honest: the stock market is as speculative as cryptocurrency, despite the SEC “overseeing” things.
How does the average person keep their money safe?
Unclear.
Whether your crypto loses value, or your stocks+401k lose value, or whether a bank run loses your money in a “collapse,” the outcome is the same. The money is gone. Or maybe it never existed in the case of value fluctuations.
However, the US government seems intent on continuing to label its economic systems and policies as “safe” while labeling crypto as “dangerous.”
Perhaps the oldest advice in the book truly is the best: diversify.
