Opinion: US Government’s Attempt to Eliminate Crypto in 2023
Disclaimer: The author’s views and opinions expressed in this article are their own and do not necessarily reflect the views and opinions of crypto.news’ editorial team.
Conspiracy theorists have always been convinced that central banks and governments would never tolerate any competition to fiat money. Even some regulators, like Brian Brooks, the former head of the Office of the Comptroller of the Currency, shared this sentiment.
The US-based crypto industry has been heavily impacted by regulatory actions. The Securities and Exchange Commission (SEC) has taken enforcement actions against regulated US crypto entities, including Kraken and Coinbase, while the Commodity Futures Trading Commission (CFTC) has sued Binance.
When Kraken faced a second action by the SEC, Jesse Powell, the founder and former CEO, expressed his concerns on Twitter.
Furthermore, in February, Paxos received a Wells Notice demanding them to stop minting the Binance USD (BUSD) stablecoin.
The Biden Administration’s “Economic Report of the President” argued against the usefulness of cryptocurrency technology and highlighted the industry’s widespread fraud.
The closure of three crypto-friendly banks, namely Silvergate, Silicon Valley Bank, and Signature Bank, has raised suspicion within the crypto industry. Figures like Senator Elizabeth Warren have called for stricter regulations on crypto, with Warren even introducing legislation to ban self-custody.
Some industry players believe that these bank closures are part of a conspiracy by federal agencies to destroy the crypto industry. This has been referred to as the new Operation Choke Point. Former Congressman Barney Frank has even suggested that Signature Bank, where he serves on the board, was shut down as an anti-crypto message.
The New York Department of Financial Services (NYDFS) denies Frank’s allegation. However, the Federal Deposit Insurance Corp. (FDIC) reportedly required any buyer of Signature Bank to limit banking services for crypto clients. Despite the FDIC’s denial, crypto clients were not included in the acquisition.
It’s worth noting that the current head of the FDIC, Martin Gruenberg, was involved in the original Operation Choke Point, which faced legal challenges and hearings that concluded that the US government had abused its power. Promised reforms by the FDIC now seem empty.
Signature Bank’s managers were surprised when regulators shut down the bank and placed it into receivership. Barney Frank, a board member of Signature Bank, believes that the decision was meant to discourage dealing with crypto. He claims there was no valid reason for the bank’s seizure and attributes it to panic surrounding cryptocurrency.
Frank also believes that Silicon Valley Bank would not have collapsed if FTX had not collapsed last year. The panic caused by FTX’s collapse had a ripple effect. The justification for shutting down Signature Bank was its Signet product, which was considered “systemic.” However, Signature Bank’s asset portfolio was not as troubled as SVB’s. Nevertheless, the three largest banking partners for the crypto industry are now history.
In 2023, the US crypto industry faced challenges from regulatory agencies like the SEC, with the judicial branch pushing back and accusing the agency of deception. However, the damage had already been done in many ways.
It is now evident that the US government poses a significant threat to the nation’s crypto industry. The industry was heavily targeted in 2023, and it is expected that 2024 will follow a similar pattern. Founders and established companies are considering jurisdictions that respect their right to innovate, which is unfortunate for the supposed “land of the free” and the crypto industry as a whole.
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Kadan Stadelmann is the Chief Technology Officer of Komodo, an open-source technology provider and creator of AtomicDEX, a cryptocurrency wallet and decentralized exchange. He is a blockchain developer and operations security expert who previously worked in IT for the Austrian and Tunisian governments.
