In 2013, the federal government launched a coordinated campaign to cut certain industries off from the financial system.
Established during the second term of President Barack Obama, the feds dubbed it Operation Chokepoint.
The effort involved the Department of Justice, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC).
The Obama administration intended the campaign to destroy businesses the administration felt were “unsavory.” It was an illegal “moral” policy rather than a judicial one.
As one official described it: The operation was designed to “[choke] them off from the very air they need to survive.”
Supporters said the campaign was necessary to protect consumers from what it considered to be “high-risk” businesses like payday lenders… or other companies engaged in legal but “undesirable” activities like sex work or online gambling.
Critics accused it of targeting politically unfavored businesses like gun dealers.
Regardless of what you think about Operation Chokepoint, it proved controversial.
After much scrutiny, the Justice Department ended it in August 2017.
Here’s why I’m telling you about Operation Chokepoint…
There’s been a lot of regulatory pushback against bitcoin and crypto this year.
The U.S. Securities and Exchange Commission has sued major exchanges like Coinbase and Kraken…
In Congress, Democratic Sen. Elizabeth Warren of Massachusetts and her “anti-crypto army” are working on legislation to kill the industry…
And even crypto-friendly states like Texas want to repeal the tax incentives they rolled out two years ago for bitcoin miners..
It seems like an all-out assault.
Some are even calling it Operation Chokepoint 2.0.
Friends, more government attacks against crypto are coming. But I believe it’s too little, too late. The genie is out of the bottle.
Bitcoin has evolved to a point where it’s unkillable by the government. And as bitcoin goes, so does the rest of the crypto market.
Operation Chokepoint 2.0
Many people in the crypto space believe the Biden administration is following in the footsteps of the Obama administration.
It’s using the government’s regulatory power to cut off a perceived “high-risk” business like crypto from the financial system.
That’s why they call it Operation Chokepoint 2.0. And it isn’t just some conspiracy theory…
Last month, we saw regulators shut down and seize the assets of three major banks: Silicon Valley, Signature, and Silvergate.
All three banks had substantial exposure to crypto projects.
Brian Brooks is the former head of the OCC and now a board member of blockchain company Bitfury.
He alleges the government shut down the banks in part because they served cryptocurrency customers.
And Brooks isn’t alone.
Former Democratic U.S. Rep. Barney Frank of Massachusetts was a board member of Signature Bank.
He believes New York officials who shut down Signature wanted to send a message to banks to stay away from crypto.
According to Frank, the bank’s situation was under control before regulators swooped in. “This was just a way to tell people, ‘We don’t want you dealing with crypto,’” Frank told the Associated Press.
Here’s my take: I don’t believe the government is trying to kill bitcoin in particular… or crypto in general.
But it does want to shift control of crypto from the domain of newcomers in the fintech industry to the established players on Wall Street.
I’m of the opinion that Wall Street is unleashing its regulatory dogs on the crypto incumbents so they can swoop in and gobble up the market.
You have to ask yourself: Why hasn’t the Securities and Exchange Commission or the Department of Justice sued financial powerhouses BlackRock and Fidelity? Both offer crypto products to their customers.
Last year, BlackRock launched a private trust offering institutional U.S. clients direct exposure to bitcoin. And Fidelity’s Digital Assets platform allows U.S. clients to buy, store, and sell digital assets.
BlackRock is the largest asset manager in the world, with $10 trillion assets under management (AUM). Fidelity is third, with $4.2 trillion AUM.
Yet unlike newcomers Coinbase and Kraken, we haven’t seen any regulatory action taken against BlackRock or Fidelity.
Why the favoritism?
As I wrote last month, it’s because bitcoin is an escape hatch from the closed loop of the traditional financial system.
Nearly 73% of securities/investment lobbyists are former federal officials. They lobby on behalf of companies like Charles Schwab, Fidelity, Morgan Stanley, and Goldman Sachs. It’s like a revolving door between the government and these industries. And it’s another way to keep the loop closed.
Now, the people who run the banks and brokerage houses aren’t dumb. Regardless of what the feds say, they know crypto is the future.
Today, bitcoin’s market cap stands around $584 billion. That’s a spit in the ocean compared to the total estimated global wealth of $463 TRILLION.
If just 5% of that flows into bitcoin, it’ll go up 40 times higher.
That’s why Fidelity and BlackRock are creating crypto custody solutions for their clients. They want a slice of the pie.
More importantly, they want to control who divvies up the pie.
The Good Ole Boys on Wall Street aren’t going to idly sit by while the new kids on the block like Coinbase and Kraken elbow them out of the way.
They’re going to fight back.
And that’s where Operation Chokepoint 2.0 comes in. It’s not about killing crypto… It’s about controlling it. It’s critical to your success in this asset that you understand this distinction.
Always remember: THEY DON’T WANT TO KILL CRYPTO. THEY WANT TO CONTROL IT.
But controlling crypto will prove harder than they think…
Bitcoin Is Unkillable
I’ve received a lot of email from my readers who are deeply concerned about the all-out assault on crypto. They worry the government will make it illegal.
Look, I get it. There is a coordinated attack against crypto. But it won’t be successful.
Since I started recommending crypto in 2016, I’ve repeatedly said that if the government wanted to ban bitcoin… They would have had to do it in the very early days of bitcoin adoption.
That’s when it was small and insignificant.
But now, it’s too late.
Too many people own it. According to Buy Bitcoin Worldwide, more than 100 million people now have a stake in bitcoin.
Plus, too many people now have a vested interest in seeing it work. Today, the total crypto market cap is nearly $1.3 trillion and has been as high as $3 trillion.
According to Citi, the underlying blockchain technology is on pace to be a $5 trillion industry by 2030.
More importantly, I believe crypto is now a voting issue.
Just think about it…
Bitcoin is a completely agnostic asset. It’s owned by Democrats, Republicans, young, old, conservative, liberal.
Regardless of your income, political affiliation, race, sexual orientation, or religion… Bitcoin is an escape hatch from the traditional financial system.
It’s no surprise underrepresented communities are turning to crypto. For people who have been locked out of the traditional financial system, bitcoin is a way around it.
Bitcoin is an asset people can unify around – even those who may differ politically. So it’s possible we’ll see an entirely new voting bloc based on bitcoin adoption.
Politicians won’t be able to disenfranchise a group that large and expect to maintain political power.
So I put my faith in that idea.
That doesn’t mean we won’t see more regulation of crypto. And some of it is needed.
I want regulators to clamp down on bad actors like FTX and others who scam the public. What I don’t want to see are regulations that kill this asset class..
Friends, I’ve always known as long as bitcoin could get beyond a certain point… It would be unkillable. And in my opinion, we’re far beyond that point.
The problems we’re seeing today are greed problems… not crypto problems. The underlying blockchain protocols are working as they should.
Eventually, Wall Street will incorporate crypto assets into the traditional financial system.
But the beauty of bitcoin is you have the choice to custody it yourself. As long as you self-custody your bitcoin, you’re essentially your own bank.
Will everyone do that? Probably not.
They’ll probably want a financial firm to custody their bitcoin, just like how millions of people allow firms to custody their gold holdings and other assets.
But for a great deal of people, including myself, self-custody is the main reason we love bitcoin. It allows us to – at least partially – control our financial destinies.
So don’t worry about the government banning bitcoin. I don’t believe it can.
And if it did (let me be clear: I don’t expect bitcoin to be banned by the U.S. government), I would expect the price of bitcoin to skyrocket, as everyone knows the fastest way to drive adoption of something is to try to ban it.
Let the Game Come to You!
Big T
P.S. While bitcoin has become an unkillable world-class asset – and I recommend everyone own at least a small amount of it – I don’t believe buying it is the most profitable move you can make right now.
In this special briefing, I shared details about a tiny subsector of the crypto market that will benefit from the coming “buying panic.”
Unlike most cryptocurrencies, these tokens are programmed to pay you monthly income on top of capital gains. And they’re set to benefit from a surge of activity coming to one of crypto’s largest networks right now.
During my special event, I explained what this catalyst is and what types of tokens will benefit from it. For a limited time, you can stream it right here.