Conspiracy theorists had long been aware that central banks and governments would never let a rival to fiat money exist. Brian Brooks, the former head of the Office of the Comptroller of the Currency, an independent bureau of the U.S. Department of the Treasury, had even hinted at this.
The SEC and CFTC’s enforcement actions against US-based crypto entities such as Kraken and Coinbase, as well as the Wells Notice served to Paxos to stop minting the Binance USD (BUSD) stablecoin, sent shockwaves through the industry. Kraken’s founder and former CEO Jesse Powell expressed dismay on Twitter, noting that “$30m buys you about 10 months before the SEC comes around to extort you again.”
In addition, the 2021 Economic Report of the President, in which the Biden Administration argued that cryptocurrency is not a useful technology, further fanned the flames of skepticism. Senator Elizabeth Warren added fuel to the fire by proposing legislation to outlaw self-custody in crypto.
The closure of crypto-friendly banks—Silvergate, Silicon Valley Bank, and Signature Bank—raised eyebrows and some within the crypto industry saw it as evidence of a conspiracy by federal agencies to destroy crypto. Former Congressman Barney Frank, who serves on the board of Signature, believes the bank was forced into liquidation as part of an anti-crypto crusade. The FDIC, which is headed by Martin Gruenberg, an architect of the original Operation Choke Point, denied buyers would forgo crypto clients. Despite this, no crypto clients were included in the acquisition.
Signature Bank’s managers were taken aback by the decision to place the bank into receivership. Barney Frank, who chaired the House Financial Services Committee after the 2008 financial crisis, noted that “if we’d been allowed to open tomorrow, that we could’ve continued.” He believes the bank was shut down as a way to tell people “we don’t want you dealing with crypto.”
2023 was a tumultuous year for the US crypto industry, with regulators shutting down entities and the judicial branch pushing back. Nonetheless, the damage had been done and the US government is now seen as an existential threat to the nation’s cryptocurrency industry. As many founders and established companies look to greener pastures in jurisdictions where their right to innovation is respected, the “land of the free” is left sorely lacking in this regard.
Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news’ editorial.
Kadan Stadelmann is the chief technology officer of Komodo, an open-source technology provider and creator of AtomicDEX, a cryptocurrency wallet and decentralized exchange rolled into one dApp. Kadan is also a blockchain developer and operations security expert who previously worked in IT for the Austrian and Tunisian governments.