If the United States government really is implementing “Operation Choke Point 2.0,” it will hurt financial stability and may have contributed to the collapse of Silicon Valley Bank, according to Donald Trump’s former acting White House chief of staff, Mick Mulvaney.
“I don’t want to think that the government would actually do that,” Mulvaney said in a March 22 Bloomberg interview in reference to the rumored operation. He did however recall attending hearings on the original Operation Choke Point — a government initiative that aimed to limit certain industries’ access to U.S. banking services.
“You have to wonder if there’s not certain policies that the administration is putting in place that have — perhaps the intended, perhaps the unintended — consequences of raising the risk, and of increasing instability, and did we just see that at SVB?” he added.
“Were people at SVB because they were really good at it, or was there some factor in there that said we’re at SVB because no one else will take us.”
Mulvaney elaborated that he believes crypto played no role in the downfall of SVB and suggested poor risk management was to blame. He implied, however, that the pressure being put on U.S. 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 an apparently coordinated effort to discourage banks from holding crypto deposits or providing banking services to crypto firms on the basis of “safety and soundness” for the banking system.
I don’t want to alarm, but since the turn of the year, a new Operation Choke Point type operation began targeting the crypto space in the US. it is a well-coordinated effort to marginalize the industry and cut of its connectivity to the banking system – and it’s working
— nic carter (@nic__carter) February 7, 2023
While is it unclear whether “Operation Choke Point 2.0” is an official strategy, Carter has claimed there is evidence supporting its existence.
Related: Yellen defends government intervention to avoid another SVB
In a Feb. 9 blog post, Carter outlined some supposed evidence, highlighting a Jan. 3 joint statement on crypto assets from the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), which warned that decentralized blockchain networks are “highly likely to be inconsistent with safe and sound banking practices.”
More recently, critics pointed to the FDIC’s different treatment of crypto assets during the takeover of Signature Bank as further proof of the existence of “Operation Choke Point 2.0.”
— nic carter (@nic__carter) March 21, 2023
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