The U.S. House Financial Services Committee held a hearing on Operation Choke Point 2.0 (OCP 2.0) this week, offering crypto industry professionals a cocktail of vindication, frustration, and relief.
If you have no idea what we’re talking about, we forgive you (but also educate yourself). As detailed in a Pirate Wires article series by Castle Island Ventures Founding Partner Nic Carter, Operation Choke Point 2.0 was an unofficial, surreptitious effort by the Biden Administration to financially maroon crypto and tech companies by cutting them off from banking infrastructure.
The bureaucratic shadow play became something of a partisan issue, as OCP 2.0 also targeted explicitly conservative institutions. Many ignored the issue, others decried it as a conspiracy theory, and others still basically shrugged and said “well, crypto IS risky, so this was probably about investor protections anyway.”
Of course, it never was, as evidenced by the fact that OCP 2.0 shut down Silvergate Bank in 2023 despite it being solvent. MARA CEO Fred Thiel summarized the extent and impact of the operation in his testimony, including the forced closures, payment service restrictions, obstruction of credit and lending, and the overall systematic attempt to exclude crypto companies from banking services.
This week’s hearing marked a complete sea-change in the official attitude toward the de-banking initiative. Not only are politicians recognizing it as abusive, but they are actively sympathizing with the Bitcoin/crypto industry in a show of fairness and commiseration that would have been unthinkable a year ago.
The conspiracy theorists were right (again)
The hearing began with an “I want to remind you why we’re all here” spiel from Rep. Dan Meuser. It plainly spelled out the Biden administration’s systematic targeting of the cryptocurrency industry.
“Today’s hearing is entitled Operation Choke Point 2.0: The Biden Administration’s Efforts to Put Crypto in the Crosshairs,” Meuser began in his opening statement.
“Operation Choke Point 2.0 was carried out by the credentialed regulators to target and in fact de-bank the digital asset ecosystem. The FDIC used offline conversation and threats of formal supervisory actions to pressure banks to deny service to digital asset firms, their employees, and even their customers. This is a serious abuse of regulatory power.”
Forget being in the Overton window – OCP 2.0 has smashed right through it. Or better put, the hearing at the outset completely defenestrated claims that OCP 2.0 was a baseless, “rightwing conspiracy theory.” Well, the conspiracy theorists were right again.
And we have new receipts to prove it.
“Speaking of shining a light,” Senator Tim Scott said during the hearing. “Just a couple of hours ago, the FDIC under President Trump’s leadership just released a fresh set of never-before-seen supervisory documents, which further prove that Choke Point 2.0 was real.”
You don’t say, Senator?
Elizabeth Warren’s janus-faced about-face
The evidence is so irrefutable at this point that there is bi-partisan acknowledgement of OCP 2.0. Even crypto’s chief antagonist, Elizabeth Warren, bent the knee – albeit in a tactless, disingenuous way.
“So de-banking is a real problem, and we need to work across the aisle to solve it,” she said during the hearing.
This is kind of like the schoolyard bully taking your lunch money, getting called out by the teachers, and saying, “look, we’re all on the same team; we need to figure out together why Anon doesn’t have money to buy a corndog.”
You took away our corndog, Beth. OWN IT.
There’s something almost theatre-of-the-absurd about the commander-in-chief of Washington’s anti-crypto army playing dumb about all of this. You almost have to respect the raw, naked hypocrisy of the act (after all, the Greek word for actor is “hypokrites”).
Because Elizabeth Warren has been the most vociferous anti-crypto politician in Washington, and her scrutiny of Silvergate in December 2022, as Riot Director of Public Policy Sam Lyman points out, arguably kickstarted OCP 2.0.
So Warren doesn’t get a pass here, even if we finally got our corndog back.
Fool me once, shame on you…
A number of congressional members and testifiers pointed out that there’s a reason this operation has 2.0 as a suffix
The first Operation Choke Point occurred under President Obama and targeted legal marijuana businesses, legal firearms businesses, and sex workers. It’s unfortunate but fitting that the spiritual successor to Obama’s de-banking regimen occurred under Biden.
Davis Wright Tremaine Partner Stephen Gannon weighed in to say Americans deserve real accountability this time around, lest there’s an Operation Choke Point hat-trick.
“Despite the best efforts of Congress, the spirit of Operation Choke Point 1.0 did not end in 2017. It simply morphed into Operation Choke Point 2.0. Mr. Chairman, history teaches that if this time, there is no real accountability and no genuine remedies for the actual damage done, one thing is certain: there will be an Operation Choke Point 3.0.”
Fool me once, shame on you. Fool me twice, well, to quote President George W. Bush, “you fooled me, you can’t get fooled again.”
Let’s hope we don’t get fooled again.
