President-elect Donald Trump has stated that he will end Operation Chokepoint 2.0. Of course, this is something the Biden Administration denies even exists.
Since the presidential election last month, a lot has changed. On the other hand, much has not.
To their credit, Biden's administration is not going down without a fight. They are using the last days to continue the tactices employed over the last few years.
In spite of the support for cryptocurrency, the attacks are still coming. This is where Operation Ckokepoint 2.0 enters.
Source: YouTube
Trump To End Operation Chokepoint 2.0?
Will Trump end this? Before getting to that, does it even exist?
According to people involved in the crypto industry, the answer is absolutly. The Biden Administartion took this tactic from Obama, which instituted the first Operation Chokepoint.
What this entails is to take an industry that legal, such as crypto, yet disliked by the Adminstration and cut it off from the banking sector. We can think of this as sanctions within the country.
Under this process, banks are pressured by the regulators to cut off business with companies in that industry. Without access to banking services, it is difficult to operate.
We saw this applied to companies involved in the cannabis industry. Biden's team decided to go after crypto companies in the same manner.
As to the question of whether Trump will end this, it is highly likely. His family has business tied to crypto so there is the self-serving nature of this move, if nothing else. On top of this, many powerful people within the crypto industry supported Trump (along with many members of Congress).
Industry Discrimination Continues
A report detailing the results of a survey show the headwinds crypto firms face. This is especially true for crypto hedge funds.
Here are some of the highlights as laid out in the Wall Street Journal:
Out of 160 crypto hedge funds, three-quarters reported issues with basic banking services over the past three years. The funds invest in digital currencies and blockchain-technology companies.
None of the 20 other alternative investors surveyed, in areas including real estate and private credit, reported similar issues.
Of the crypto funds that faced issues, a little more than half were told that banks planned to end the relationship. The rest either weren't informed or didn’t answer the survey question.
When banks communicated, most didn't give crypto funds a clear reason for denying access. Banks told two funds they were limiting crypto clients and industry exposure.
This sentiment was also expressed by venture capitalist Marc Andreeson. He noted how most of the crypto businesses that his company funded faces issues gaining access to banking services.
It was action that started to move to social media:
Andreessen told Joe Rogan’s podcast in November that he knew of 30 tech founders, many in crypto, who had their bank accounts closed in the past few years.
“This is one of the reasons why we ended up supporting Trump,” Andreessen said on the episode.
Shortly after the Rogan episode was published, several crypto founders shared stories of big banks including JPMorgan Chase, Bank of America and Citigroup closing their company and personal accounts. Musk reshared their stories on his X account.
The topic is starting to be openly discussed. For years, the crypto industry was aware of what was happening. Any mention of it was scoffed as, especially by the meedia. This is simply another reason why that is an industry in decline.
Incalculable Harm
How many businesses were shut down due to this action? Equally as important, how many moved offshore to more crypto friendly havens?
Unfortunately, these actioins, based mostly on politics, caused incalable harm. When dealing with technology, innovation is key. This means startups are some of the biggest drivers, altering society. They end up being disruptors because they accomplish what incumbants refuse to tackle.
To the latter, the status quo is just find.
It is not a stretch to believe the banks were on board with this. Unlike the cannabis industry, which poses no direct threat, crypto could be viewed as a competitor to the financial sector. In other words, the same entities providing the services are shutting down a threat to their bsuiness model.
Regulatory capture at its finest.
This certainly was aided by the former Goldman Saches executive, Gary Gensler, as head of the securities and ⇪ Commission× (SEC). This agency attacked crypto companies in every way possible.
Get Out Of The Way
I long maintained that crypto did not need government approval to be successful. Actually, we are looking at a disruption of the financial system, something that is heavily relied upon by governments.
The key is simply to be neutral. Another way of phrasing this is for government to get out of the way.
Certainly, the present administration in the United States decided to take on an adversarial role. This is something that cannot be denied at this point.
Does the new administration need to be "friendly"? In my opinion, no. Simply get out of the way. Have the SEC focus upon crimes commited by the banks (which happens daily). There is no need to stiffle crypto.
Of course, there is no way to depend upon this. The Trump administration could turn tail and be equally as aggressive. However, there is a major diffference: AI.
This is going to change everything. The power dynamics are shifting in such a way that people will be amazed how impotent large entities, including governments, truly are.
We are nearing the explosion. The era of AI agents changes everything, politics included.