US Lawmakers Probe Crypto Debanking
The US House Committee on Oversight and Government Reform has launched an investigation into allegations of crypto company debanking, a practice some have called "Operation Chokepoint 2.0." This action follows claims that the Biden administration stifled the cryptocurrency industry by cutting off access to banking services. With Donald Trump's return to office, the crypto industry anticipates regulatory reforms leading to greater banking sector integration.
Congressional Inquiry into Crypto Debanking
A Forbes report details the Committee's investigation into the "improper debanking" of crypto-related individuals and organizations. Led by Chairman James Comer (R-Ky.), the inquiry will involve gathering testimony from affected parties.
The Committee sent letters to industry leaders outlining its investigation, aiming to determine whether the reported debanking is due to individual bank decisions or government overreach.
Industry Accusations of Government Overreach
The term "Operation Chokepoint" originates from the Obama administration, referring to restrictions on financial services for certain industries. Marc Andreessen, co-founder of Andreessen Horowitz, has labeled the current debanking trend "Operation Chokepoint 2.0."
This sentiment is echoed by Coinbase CEO Brian Armstrong and CLO Paul Grewal, who assert that regulators have used various methods to hinder the digital asset industry. Hayden Adams, founder of Uniswap Labs, reported having bank accounts closed without warning, stating that many in the crypto industry have faced similar treatment.
SEC's Role in the Controversy
Armstrong further claims that the SEC and former Chair Gary Gensler attempted to "unlawfully kill" the crypto industry, describing the actions as "unethical and un-American." Ripple’s CTO, David Schwartz, characterizes this as indirect government regulation.
The Scope of the Debanking Issue
Reports suggest that over 120 crypto hedge funds have been debanked in the past three years, a disparity noted as real estate and private credit investors retained banking access. The Committee cites First Lady Melania Trump's reported debanking experience as an example of potential political bias.
This investigation seeks to protect crypto users and investors from unfair government control, aiming to create a fair trading environment. The unredacted FDIC files obtained by Coinbase are expected to play a significant role in the investigation.
The Future of Crypto and Banking
Circle CEO Jeremy Allaire anticipates banks will soon facilitate cryptocurrency trading, believing Trump's policies will end "Operation Chokepoint 2.0." This sentiment is shared by Bank of America CEO Brian Moynihan, highlighting the banking industry’s openness to cryptocurrencies. Major Wall Street firms are also increasingly interested in entering the crypto market.
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