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Predictably, conspiracy theorists were not caught off guard. They had long anticipated that central banks and governments would never tolerate a rival to fiat currency. Even certain regulators were aware of this. For example, Brian Brooks, the former head of the Office of the Comptroller of the Currency, a division of the U.S. Department of the Treasury, has hinted at this.
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Regulators have cast a shadow over the entire U.S.-based cryptocurrency industry. The Securities and Exchange Commission (SEC) took action against regulated U.S. crypto entities like Kraken and Coinbase, while the Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance.
When the SEC targeted Kraken for the second time, Jesse Powell, the founder and former CEO, expressed his concerns on Twitter.
Furthermore, Paxos received a Wells Notice in February demanding the New York-based company to cease minting the Binance USD (BUSD) stablecoin.
The “Economic Report of the President” released by the Biden Administration dismissed cryptocurrency as a valuable technology and highlighted the prevalent fraud in the industry.
The closure of three crypto-friendly banks – Silvergate, Silicon Valley Bank, and Signature Bank – has raised suspicions within the skeptical crypto industry. Politicians like Senator Elizabeth Warren have called for a crackdown on crypto, with Warren even introducing legislation to ban self-custody in crypto.
Some figures in the crypto industry have pointed to these bank closures as evidence of a conspiracy by federal agencies to undermine crypto – labeling it the new Operation Choke Point. Former Congressman Barney Frank even suggested that the bank where he serves on the board, Signature, was closed as part of an anti-crypto campaign.
The Federal Deposit Insurance Corp. (FDIC) reportedly required any buyer of Signature Bank to limit banking services for crypto clients, despite denying that buyers would exclude crypto clients.
The shutdown of Signature Bank came as a surprise to its management. Barney Frank, a board member known for the Dodd-Frank Act, expressed his disbelief at the decision.
Frank believes that the shutdown was a message against dealing with crypto, attributing it to unjustified panic around cryptocurrency. He also mentioned that if FTX had not collapsed, SVB and Signature Bank might not have suffered the same fate.
The U.S. crypto industry faced challenges in 2023, with the judiciary questioning agencies like the SEC for deceptive practices. However, the damage was already done in many aspects.
It is evident that the U.S. government poses a significant threat to the cryptocurrency industry in the country. The events of 2023 indicate a bleak outlook for 2024, prompting founders and companies to consider more crypto-friendly jurisdictions. This shift is unfortunate for the “land of the free” and the crypto sector as a whole.
For more information:
Crypto vs. traditional finance: comparing investment performance in 2023
Kadan Stadelmann, the CTO of Komodo, a provider of open-source technology and creator of AtomicDEX, a cryptocurrency wallet and decentralized exchange platform, is a blockchain developer and operations security expert who has previously worked for the Austrian and Tunisian governments. Follow Us on Google News.