According to Donald Trump’s former acting White House chief of staff, Mick Mulvaney, if the US government truly implements “Operation Choke Point 2.0,” it will harm financial stability and may have led to the failure of Silicon Valley Bank.
“I don’t want to imagine that the government would actually do it,” Mulvaney said of the suspected operation in a March 22 Bloomberg interview. He did, however, recall hearings on the first Operation Choke Point, a government operation aimed at restricting specific companies’ access to US banking services.
“You have to question if there aren’t certain policies that the administration is putting in place that have the unintended consequences of raising the risk and increasing instability, and did we just witness that at SVB?” he continued.
“Was it because people were extremely brilliant at it that they were at SVB, or was there some aspect in there that said we’re at SVB because no one else will accept us?”
Mulvaney went on to say that he believes crypto played no role in SVB’s demise and that poor risk management was to blame. He did, however, imply that the pressure on US banks to avoid crypto may have led to SVB’s demise.
“Operation Choke Point 2.0” is a term invented by Coin Metrics co-founder Nic Carter to describe a seemingly coordinated attempt to prevent banks from keeping crypto deposits or providing banking services to crypto enterprises on the basis of “safety and soundness” for the banking system.
While it’s unclear whether “Operation Choke Point 2.0” is an official tactic, Carter claims there’s evidence to back it up.
Carter outlined some alleged evidence in a Feb. 9 blog post, citing a joint statement on crypto assets issued by the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) on Jan. 3, which warned that decentralized blockchain networks are “highly likely to be inconsistent with safe and sound banking practices.”
Most recently, opponents alluded to the FDIC’s distinct treatment of crypto assets during the acquisition of Signature Bank as evidence of “Operation Choke Point 2.0.”
