The continued failure of cryptocurrency companies to gain regulatory approval in the United States has led to a “pervasive belief” in the industry that the country’s financial regulators are reluctant to allow the industry to grow.
According to sources, U.S. financial regulators are passing a series of policies and “written and unwritten” regulations that make it “impossible or impossible” for cryptocurrency-related companies to do business in the country.
Kristin Smith, CEO of the Blockchain Association, compared:
“It felt like they were shaking hands and bombing the rug.”
The government has repeatedly denied being anti-cryptocurrency, but the actions of regulators in recent months, notably the U.S. Office of the Comptroller of the Currency, against the company’s implicated app paint a very different picture.
fund protection trust
The U.S. Office of the Comptroller of the Currency (OCC) recently rejected Protego Trust’s application, even though the company received conditional approval in 2021. The company wants to provide cryptocurrency custody services to institutional clients and has no intention of dealing with retail investors.
According to the report, Protego was “reverse engineered” to ensure it would be attractive to policymakers in Washington, D.C., and would have a smooth regulatory approval process. The company raised $80 million and quickly won conditional approval, helping them reach a $2 billion valuation.
However, the OCC rejected Protego’s application for a National Trust license in February, citing previously unmentioned “regulations” after completing all requirements for full approval in February.
Protego founder Greg Gilman said:
“In the end, it felt like an unannounced and inexplicable policy change derailed our efforts.”
While Protego was built to appeal to the regulatory environment, their experience is similar to that of most cryptocurrency-related companies trying to gain approval in the country.
Operation Chokepoint 2.0
Regulators’ negative attitude toward cryptocurrencies suggests a possible comeback for Operation Chokepoint, industry insiders say. It was an Obama-era policy aimed at killing certain politically unpopular industries, such as gambling, tobacco and pornography.
Under this policy, financial regulators judiciously teamed up to cut off industry access to banking services, citing an oft-arbitrary reputational risk. This practice continued until the U.S. Congress stepped in and created rules to ensure it never happened again.
However, the Biden administration has eased regulations since it took office, raising concerns that regulators are again trying to weed out unpopular industries from the banking sector. Among them, cryptocurrencies are the latest target.
Several members of the U.S. Congress recently wrote to prudent regulators highlighting such concerns and directing them to disclose all communications with cryptocurrency companies to investigate whether unfair practices are occurring again.
Meanwhile, the U.S. Congress recently held hearings for industry experts and players to address the myriad obstacles and setbacks in this regulatory process. However, lawmakers have yet to take any action.
According to the report, this view has also been recognized by observers in the political and legal circles.
A former management official asserted:
“It’s different from the original choke point because they’re very public about it — no one can guess their point of view. Another difference is that it’s actually wider this time around.”
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According to Cryptoslate
