The Breakdown
Operation Chokepoint 2.0 Finally Has Smoking Guns
Jan 7, 2025
The legal drama between Coinbase and the FDIC reveals the extensive influence of Operation Chokepoint 2.0 over banking practices. Recent FDIC letters aim to stifle crypto activities, threatening retail access and innovation. Community banks face regulatory hurdles that limit their ability to engage with cryptocurrencies, despite their potential as innovators. The discussion highlights how U.S. regulations have hindered fintech, exemplified by stalled projects like USDF. Overall, concerns over government power and its chilling effects on crypto innovation take center stage.
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Quick takeaways
- The unredacted FDIC documents reveal a coordinated effort to stifle crypto innovations within banks, including targeted products like Bitcoin rewards cards.
- A shift in regulatory attitudes could revive crypto offerings from banks, potentially transforming the financial landscape and enhancing access to digital assets.
Deep dives
Operation Chokepoint and Its Implications
Operation Chokepoint, as evidenced by newly unredacted FDIC documents received by Coinbase, revealed the extensive efforts to restrict various crypto activities within banks. The documents included 25 'pause letters' sent to banks, which indicated a coordinated attempt to hinder services related to cryptocurrencies, such as Bitcoin and Ethereum exposure in banking apps. Notably, the FDIC targeted banks for offering products like a Bitcoin rewards debit card and even those engaging in minor NFT purchases. The overarching strategy appeared to inhibit retail access to cryptocurrencies, effectively stifling innovation and growth in the sector.
