May 28, 2023

Strangle the bastard: how the US cracks down on crypto ahead of the launch of FedNow

Back in 2013, Operation Choke Point began in the United States. The purpose of the operation was to cut off access to banking services for legal but“unreliable” businesses (gambling, porn, guns, payday loans) in the way that the Obama administration understood the concept of “unreliable”. The program was canceled in 2016.
Strangle the bastard: how the US cracks down on crypto ahead of the launch of FedNow

Lately in the crypto world is talking about Operation Choke Point 2.0, directed against crypto. The point is to cut or hardlimit the access of the crypt to the American banking system so that the crypt does not go beyond the crypto world. This issue is especially relevant in the run-up to the launch of FedNow, the American version of our Fast Payment System (FPS).

The attack appears to be being coordinated by the Fed's vice president of oversight, Michael Barr. His last official speech on cryptocontains a warning to banks that they “should take a prudent approach in relation to activities related to crypto assets and to the cryptocurrency sector.” The speech is dated March 9th. On March 10, Silicon Valley Bank, which served many crypto projects and stored $ 3.3 billion in reserves of Circle, which issues USDC, closed.

Despite the fact that the problems of regional banks inThe US is linked to rising interest rates and falling bond prices, not crypto, the pressure on banks will continue. In addition to banks, you can press with the help of the SEC, which has become very active recently.

The SEC sued Justin Sun, alleging thatits TRX and BTT are unregistered securities. And crypto exchange Coinbase received a so-called Wells notice warning the exchange that the SEC could file charges of violating securities laws.

There is no doubt that the attack from two sides (Fed and SEC) will continue in the coming monthswhile the start of the American election campaign is still far away.

Of course, there is nothing particularly good aboutAmericans systematically cut off the crypt from the dollar system, no. However, crypto has enough safety margin to survive this pressure and become a more independent industry.

In the short term, we should expect an overflowcrypto projects to friendlier jurisdictions, and later, possibly, to friendlier fiat currencies. For example, the CEO of Ripple recently said that the industry is “already pulling” out of the US, and law firm Harvey Law Group noted a growing number of people wanting to relocate due to pressure on crypto.

Among the crypt bitcoin looks like the biggest beneficiary of the current events: The SEC could certainly try to sueSatoshi Nakomoto, but nothing but clowning will come of it. The pressure on bitcoin fiat links looks more realistic, but there are many currencies, and bitcoin will have time to adapt. Among the stables Tether's (USDT) offshore position gives it an edge over archrival Circle (USDC), which has already experienced an outflow of funds after the story with Silicon Valley Bank.

The original post and other interesting materials can be found in the Bitbanker CEO Telegram channel:

  • The crypt is losing its connection with the USD. Where it leads?

  • New sanctions on SWIFT - what to do?

  • How will the Swiss banking crisis affect crypto?

  • We will be happy to answer your questions in the comments.