If the U.S. government really implements ‘Operation Choke Point 2.0,’ it will harm financial stability and may have contributed to the collapse of Silicon Valley Bank, says former acting chief of staff at Donald Trump at the White House, Mick Mulvaney.
“I don’t want to think the government would actually do that,” Mulvaney said in a March 22 Bloomberg. interview with reference to the supposed operation. He recalled, however, attending hearings on the original Operation Choke Point – a government initiative to limit certain industries’ access to US banking services.
“You have to ask yourself if there aren’t some policies that the administration is putting in place that have – maybe the intended consequences, maybe the unintended consequences – increasing the risk and increasing the instability, and did we just see that at the SVB?” he added.
“Were people at SVB because they were really good at it, or was there a factor in there that said we were at SVB because no one else would take us.”
Mulvaney explained that he believes crypto played no role in SVB’s downfall and suggested that poor risk management was to blame. He hinted, however, that pressure on US banks to avoid crypto may have contributed to SVB’s collapse.
“Operation Choke Point 2.0” is a term coined by Coin Metrics co-founder Nic Carter to refer to a seemingly coordinated effort to discourage banks. to hold crypto deposits or provide banking services to crypto businesses based on the “safety and soundness” of the banking system.
I don’t want to be alarmed, but since the beginning of the year, a new Operation Choke Point type operation has started targeting the crypto space in the United States. it’s a well-coordinated effort to marginalize the industry and cut its connectivity to the banking system – and it works
– nic carter (@nic__carter) February 7, 2023
While it’s unclear if “Operation Choke Point 2.0” is an official strategy, Carter claimed there is evidence to support its existence.
Related: Yellen defends government intervention to avoid another SVB
In a February 9 blog post, Carter presented purported evidence, pointing to a January 3 joint statement on crypto assets from the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency ( OCC), which warned that decentralized blockchain networks are “very likely to be incompatible with safe and sound banking practices.”
More recently, critics have pointed to the FDIC’s differential treatment of crypto assets during the Signature Bank takeover as further evidence of the existence of “Operation Choke Point 2.0.”
– nic carter (@nic__carter) March 21, 2023
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