If the US government is indeed implementing “Operation Choke Point 2.0”, it will harm financial stability and may have contributed to the collapse of Silicon Valley Bank, according to former Donald Trump acting White House chief of staff Mick Mulvaney.
“I don’t want to think that the government would actually do that,” Mulvaney said in a March 22 Bloomberg interview. interview in reference to the rumored operation. However, he recalled attending hearings on the original Operation Choke Point, a government initiative aimed at limiting the access of certain industries to US banking services.
https://www.youtube.com/watch?v=b6M7OLFrxYI
“You have to wonder if there aren’t certain policies that the administration is putting in place that have, perhaps the intended, perhaps unintended consequences of increasing risk and increasing instability, and we just saw that at SVB? she added.
“Were people in SVB because they were really good at it, or was there some factor that said we were in SVB because no one else would accept us.”
Mulvaney explained that he believes cryptocurrencies played no role in SVB’s downfall and suggested that poor risk management was to blame. However, he hinted that the pressure being put on US banks to avoid cryptocurrencies may have contributed to the collapse of SVB.
“Operation Choke Point 2.0” is a term coined by Coin Metrics co-founder Nic Carter to refer to a seemingly coordinated effort to discourage banks. from holding crypto deposits or providing banking services to crypto businesses on the basis of the “safety and soundness” of the banking system.
I don’t want to alarm you, but since the turn of the year, a new Choke Point type operation began targeting the crypto space in the US. It is a well-coordinated effort to marginalize the industry and cut off its connectivity to the banking system, and it is running
— nic carter (@nic__carter) February 7, 2023
While it is unclear if “Operation Choke Point 2.0” is an official strategy, Carter has claimed that there is evidence to support its existence.
Related: Yellen defends government intervention to prevent another SVB
In a Feb. 9 blog post, Carter outlined some alleged evidence, noting a Jan. 3 joint statement on crypto assets from the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency ( OCC), which warned that decentralized blockchain networks are most likely “inconsistent with safe and sound banking practices.”
More recently, critics pointed to the FDIC’s different treatment of crypto assets during the Signature Bank acquisition as further evidence of the existence of “Operation Choke Point 2.0.”
— nic carter (@nic__carter) March 21, 2023
Related: Best and Worst Countries for Cryptocurrency Taxes, Plus Cryptocurrency Tax Tips
