Operation Choke Point 2.0: Fed Warning Signals Potential Impact on Over 130 Banks
Are we witnessing the resurgence of Operation Choke Point? Concerns are mounting following a recent Federal Reserve (Fed) warning that could potentially affect over 130 banks. This alert, coupled with existing anti-crypto guidance and recent bank collapses, has reignited fears surrounding regulatory pressure and its impact on specific industries.
The Specter of Operation Choke Point 2.0 (OCP 2.0)
The original Operation Choke Point, initiated years ago, aimed to combat fraud by discouraging banks from providing services to businesses deemed “high risk.” While ostensibly targeting criminal activity, critics argued it led to de-banking and unfairly targeted legitimate businesses. Now, the anxiety centers around whether a similar approach is being employed, particularly towards the crypto industry. “AMID ALL THE JUBILATION ABOUT the OCC news, Operation Choke Point 2.0 (OCP 2.0) isn’t over until: 1. Fed and FDIC also rescind their anti-crypto guidance.”
Fed, FDIC, OCC Issue Coordinated Statements: Crypto Under Scrutiny
Adding fuel to the fire, the Fed, FDIC, and OCC have issued coordinated statements warning banks about crypto risk. Releasing a joint statement today, the US regulatory body has wanted banks to stay on high alert against crypto-related liquidity risks. Conversely, with many fearing an, overreach, the question becomes: Are these legitimate concerns or the beginnings of a new wave of regulatory pressure similar to the original Operation Choke Point?
Bank Collapses and Congressional Hearings
The timing is crucial. Silvergate, Signature, and SVB collapse in rapid succession. Congressional hearing: FDIC, OCC, and scrutiny of banking practices has intensified. The collapses themselves raise questions about risk management and regulatory oversight. Are the recent Fed warnings a direct response to these failures, or are they part of a broader strategy to limit exposure to specific sectors, particularly crypto?
De-banking Crypto: A New Variation?
Concerns are growing that the current regulatory environment may be leading to the de-banking of crypto-related businesses. De-banking crypto is simply the latest variation of regulators using vague and amorphous standards to supervise bank conduct through the subjective lens of what the. This raises significant concerns about fair access to financial services and the potential for regulatory overreach based on subjective assessments.
What’s Next?
The future remains uncertain. The extent to which the Fed's warning will impact banks and the industries they serve remains to be seen. Monitoring regulatory pronouncements and congressional oversight will be crucial in understanding the evolving landscape and determining whether Operation Choke Point 2.0 is truly underway.