- The law firm Cooper & Kirk has sent a letter to the US Congress regarding regulatory overreach against the crypto industry.
- The firm has urged Congress to hold the agencies accountable and has proposed questions and steps to obtain answers.
- Cardano founder Charles Hoskinson has commented on the letter in a YouTube video.
Washington, D.C. law firm Cooper & Kirk PLLC on Friday 24th of March released a white paper alleging that US federal regulators are engaging in a “clandestine financial war” against the cryptocurrency industry.
The report claims that regulatory bodies such as the Federal Deposit Insurance Corporation (FDIC) and the Options Clearing Corporation (OCC) are using “regulatory tools and pressure tactics” to limit the extent to which digital assets can be integrated into the financial system.
Federal Banking Regulators Must Be Held Accountable
Dubbed “Operation Chokepoint 2.0,” the report likens the recent regulatory measures to a similar initiative under the Obama administration, which aimed to target fraudulent and high-risk industries such as tobacco and payday lending. Cooper & Kirk’s report goes on to explain how regulators are issuing informal guidance documents that target crypto users deemed as posing a higher risk to banks.
The report raises concerns over the increased regulatory scrutiny that the crypto industry has been subject to in recent years. The law firm argues that Operation Chokepoint 2.0 deprives businesses of their constitutional rights to due process, violates the non-delegation doctrine, and anti-commandeering doctrine. This deprives Americans of key structural constitutional protections against the arbitrary exercise of governmental power, according to the report.
Cooper & Kirk alleges that as a result of these measures, businesses and individuals in the industry have been “debanked” and had access to the automated clearinghouse (ACH) network revoked. While the firm claims to have been instrumental in halting the original Operation Chokepoint, they state that it is now up to Congress to hold federal banking regulators accountable.
Federal Bank Regulators Circumvent Notice and Comment
The report’s principal author and Cooper & Kirk attorney, David H. Thompson, argues that federal bank regulators are circumventing notice and comment rule-making requirements by implementing binding measurements on the banking industry.
Thompson asserts that by refusing to permit banks to serve the crypto industry, the federal bank regulators are effectively preventing banks that specialize in serving the industry from doing business in the US.
While the FDIC declined to comment on the white paper, a spokesperson for the regulatory body clarified that banking organizations are neither prohibited nor discouraged from providing banking services to customers of any specific class or type, as permitted by law or regulation.
Hoskinson Urges Readers to Make Congresspeople Aware of Regulatory Abuse
Charles Hoskinson, the founder of Cardano (ADA), described the white paper as “meticulously resourced,” a “fascinating read,” and “the most detailed letter I’ve seen about this” in his YouTube video streamed on March 29.
Hoskinson recommends forwarding the letter to Congress and urges readers to make their Congresspeople and Senators aware of the regulatory abuse taking place and the risk and damage that’s been done.
On the Flipside
- While the closure of bank accounts and restrictions on ACH network access may be inconvenient for crypto firms, it is not necessarily discriminatory. Banks have the right to terminate relationships with any customers they consider to be high risk or potentially involved in illegal activity.
- The lack of clear regulation has created confusion for businesses looking to incorporate cryptocurrencies into their operations, which has potentially hindered adoption.
- As the crypto industry continues to grow, it will become increasingly important for regulators to keep up with new developments and adapt their approach accordingly.
Why You Should Care
Regulatory actions against the crypto industry are gaining momentum in the US. Federal banking regulators are allegedly using informal guidance documents and pressure tactics to limit the impact of digital assets on the financial system. This has led to businesses and individuals associated with the industry being “debanked” and revoked access to financial networks. The impact of these actions could be significant for the crypto market, and may hinder the growth and adoption of digital assets in the US.
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