Since the beginning of the year, the crypto industry has been subjected to increased regulatory pressure, which has sparked debate on Twitter regarding whether the United States government is secretly attempting to regulate the industry as a whole.
Brian Armstrong, CEO of Coinbase, has provided the most recent piece of the theory’s puzzle. Armstrong wrote a few hours ago on Twitter that he had heard rumors that the Securities and Exchange Commission (SEC) of the United States wants to prohibit retail staking.
The Blockchain Association’s chief policy officer, Jake Chervinsky, confirmed the rumor. The attorney stated, “I’ve heard the same rumor and completely agree with Brian that an attack on staking would be an extreme error in US policy.”
Rumors About A Crypto Crackdown
The SEC has officially launched an investigation into Kraken, one of the largest US exchanges, as of just yesterday. The alleged offering of unregistered securities to US customers is the reason.
However, the attack on the cryptocurrency sector goes much further. Nic Carter, a journalist, wrote:
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 off its connectivity to the banking system – and it’s working.
According to the author Samuel Andrew, the Office of the Comptroller of the Currency (OCC) and the United States central bank are engaged in a significant crypto-debanking operation. Andrew was informed by an unidentified source that “what is going on is draconian and aimed to kill crypto.”
The analyst explained that crypto-friendly states like Wyoming and even Morgan Stanley and Custodia are being targeted by the Fed and OCC. Andrew was informed by a different source that the OCC instructed Paxos and others to withdraw their applications for a banking license or face rejection by Friday.
Andrew cited a different source as saying, “VC’s are starting to become very, very concerned that their crypto portfolio companies are being de-banked en masse.” He went on to say, “The OCC is said to produce a paper in the near future that is said to be so draconian that a sizable portion of OCC employees may depart,” and so on.
Traces by The United States Government
It would appear that the relationship between the industry and the banking sector is the primary focus of the United States government. According to what Binance recently communicated to customers in the United States (not Binance US), one alleged objective could be for cryptocurrency businesses to completely lack a connection to a bank, preventing them from processing deposits and withdrawals in fiat. However, issues could also arise with stablecoins.
Carter wrote that there are numerous indications for this. Signature Bank made the announcement on December 7 that it would reduce crypto customer deposits by half. A joint statement on security risks for banks that deal with cryptocurrencies was released on January 3 by the Fed, FDIC, and OCC.
On January 9, Metropolitan Commercial Bank ceased all crypto transactions a few days later. In accordance with Signature Bank’s policy, Binance decided on January 21 to only accept fiat transactions worth more than $100,000.
The Federal Reserve warned banks not to hold crypto assets or issue stablecoins on January 27, rejecting Custodia’s two-year application to join the Federal Reserve System. The National Economic Council also issued a policy statement on the same day that strongly discouraged banks from serving crypto customers but did not explicitly prohibit them from doing so.
Actions continued even during the first week of February. Silvergate’s interactions with FTX and Alameda prompted the Department of Justice to initiate an investigation. The Federal Reserve published its January 27 statement in the Federal Register on Tuesday, making it a final rule without requiring Congressional approval.
It remains to be seen whether the initiatives will be successful or whether the crypto industry in the United States will be able to withstand the pressure. If not, the business may be forced to relocate overseas.