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Joe Biden administration’s ongoing efforts to deny cryptocurrency companies access to banking services have become known as Choke Point 2.0. Operation Choke Point Background Introduced by former president Barack Obama’s administration in 2013, Operation Choke Point was intended to combat fraud and illegal activity by denying criminals access to the banking system. By forcing financial institutions to cut ties with high-risk businesses, regulators hoped to “choke off” how illicit actors could continue to fund their operations. Despite the good intentions, there were concerns in the community that legitimate businesses were being unfairly targeted. The program ended in August 2017, when the Department of Justice announced that the Obama administration’s operation was officially ending, claiming that it was harming legitimate businesses instead of preventing fraud as intended. What is known about Choke Point 2.0 Venture capitalist Nic Carter first announced the start of Choke Point 2.0 in early 2023, following a series of moves by the Biden administration to isolate the crypto industry from the banking sector. In his Feb. 8, 2023 article, Carter discusses how small movements have become a sophisticated, large-scale crackdown on the crypto industry. For example, the presidential administration has launched a coordinated plan across multiple agencies to discourage banks from doing business with crypto firms. The government’s efforts have targeted both traditional banks that will serve crypto clients and crypto firms seeking banking licenses. Key Features Carter noted that the fate of banks showing even the slightest interest in cryptocurrencies remains hopeless at the moment. Many financial institutions refuse to work with cryptocurrency, calling it “toxic” and citing the risks of interacting with this asset class. In listing the consequences of ill-considered policies, Carter cited several examples, including Signature Bank’s significant reduction in the volume of cryptocurrency deposits, the closure of the cryptocurrency department at Metropolitan…

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Filed under: News - @ August 4, 2024 6:04 am