My Crypto Lawyer
The recent actions of the United States Securities and Exchange Commission (SEC) against the cryptocurrency market seem to be in line with the expectations of the venture capitalist and CoinMetrics co-founder Nic Carter which he voiced earlier.
Indeed, before the news of the regulatory crackdown on crypto trading platform Kraken, Carter warned there were coordinated efforts against the crypto industry in the U.S. and that these activities have been intensified in the new year, as he explained on February 7.
In a summary he published on February 9, the venture capitalist detailed his views, claiming that “the US government is using the banking sector to organize a sophisticated, widespread crackdown against the crypto industry” he referred to as “Operation Choke Point 2.0” and that it is not hiding these efforts.
“However, the breadth of this plan — spanning virtually every financial regulator — as well as its highly coordinated nature, has even the most steely-eyed crypto veterans nervous that crypto businesses might end up completely unbanked, stablecoins may be stranded and unable to manage flows in and out of crypto, and exchanges might be shut off from the banking system entirely.”
Anti-crypto activities
On top of that, Carter also listed all the activities of “the administration itself, influential members of Congress, the Fed, the [Federal Deposit Insurance Corporation (FDIC)], the [Office of the Comptroller of the Currency (OCC)], and the [Department of Justice (DoJ)],” that he sees as part of this coordinated plan.
The activities range from a December letter from a group of Senators to crypto-friendly bank Silvergate, “scolding them for providing services to FTX and Alameda Research,” to the joint statement of the Fed, the FDIC, and the OCC on the risks of engaging with crypto, to the National Economic Council “strongly discouraging banks from transacting with cryptoassets,” and many more.
It is also worth noting that, back in October 2022, CoinMetric’s co-founder heavily criticized the White House Office of Science and Technology Policy report on climate implications for crypto mining with Peter McCormack in his What Bitcoin Did podcast.
The report, he said, included “possible ways to tackle Bitcoin (BTC) mining and the industry, including possible legislation, possible bans, things like that,” admitting he expected “state-level bans in the more progressive states,” and accusing the agency of laziness in their approach:
“I think they may have just been lazy, and they’re like, ‘Yeah, we’ll pick the first few results on Google Scholar and go for that.’ Digiconomist is not a reliable source, it’s not something I would expect to see in a serious academic publication, so I think it’s embarrassing.”
Consequences for the crypto market
As a consequence of these actions, Carter enumerated developments such as Signature halving crypto clients’ deposits, Metropolitan Commercial Bank shutting down its crypto vertical, fraud investigation into Silvergate, as well as Binance suspending USD bank transfers for retail clients, among other effects.
Meanwhile, Kraken was forced to shut down its staking services in the U.S. and pay a $30 million fine as part of the settlement with the SEC, which charged the platform of selling unregistered securities, upon which the global crypto market capitalization lost more than $40 billion in a single day.
At the same time, the SEC is involved in a widely publicized legal battle against Ripple, the blockchain company that the regulator is accusing of illegally offering the XRP token, which it considers a security. The outcome of this lawsuit is projected to have a profound effect on the XRP price, as well as the general sentiment in the market.
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