Choke Point 2.0: What is it, and why is it not happening?

According to reports, Adrianne Harris, head of the New York Financial Services Department (NYDFS), stated that Signature Bank’s acquisition last month was not part of any so-called Choke Point 2.0. She called the idea absurd and ridiculous, and the decision to intervene and close Signature had nothing to do with cryptocurrency. The idea of regulators attempting to debank cryptocurrency was foolish.

NYDFS Director: The idea of regulatory agencies attempting to debank cryptocurrencies is foolish

Recently, there has been some talk about a potential “Choke Point 2.0” in the banking and cryptocurrency industries. The concept of Choke Point 2.0 is the idea that regulators are attempting to debank cryptocurrency businesses by pressuring banks to cut off their access to financial services. However, according to Adrianne Harris, the head of the NYDFS, this is simply not happening. In this article, we will explore what Choke Point 2.0 is, why it was thought to be a possibility, and why it is, in fact, not happening.

What is Choke Point 2.0?

The original Choke Point was a policy implemented by the Obama administration in 2013. The goal of this policy was to crack down on fraud in industries that were considered high risk, including payday lenders, debt collectors, and firearm dealers. The idea was to force banks to monitor transactions from these types of businesses more closely and cut off their access to financial services if they were found to be engaged in fraudulent activity.
Choke Point 2.0, on the other hand, is the belief that regulators are attempting to apply these same tactics to the cryptocurrency industry. The notion is that regulators are putting pressure on banks to cut off their business with companies that deal in cryptocurrency. This stance, however, has not been entirely supported by financial regulators.

Why was Choke Point 2.0 thought to be a possibility?

There are a few reasons why some people believe that Choke Point 2.0 may be happening. First, there has been a long-standing concern among regulators that cryptocurrency is being used to facilitate illegal activity. There have been reports of money laundering, tax evasion, and other illegal activities being carried out using cryptocurrency. As a result, regulators have been paying extra attention to the industry.
Secondly, there is a growing belief that cryptocurrency represents a threat to traditional banking. The ability to make fast, secure, and relatively low-cost transactions without the need for a middleman makes cryptocurrency an attractive alternative to traditional banking services. However, this could mean that banks stand to lose revenue as more people turn to cryptocurrency.

Why is Choke Point 2.0 not happening?

Despite the concerns outlined above, there is no evidence to suggest that regulators are actively pursuing a strategy of debanking cryptocurrency businesses. Adrianne Harris, the head of the NYDFS, recently stated that the recent closure of Signature Bank had nothing to do with cryptocurrency and that the idea of Choke Point 2.0 was “absurd and ridiculous.”
In addition, regulatory bodies such as the Financial Crimes Enforcement Network (FinCEN) have released guidance outlining the obligations of banks and other financial institutions when dealing with cryptocurrency businesses. This guidance provides clarity on how banks can comply with anti-money laundering and know-your-customer regulations when working with cryptocurrency businesses.

Conclusion

In conclusion, Choke Point 2.0 is not happening. While there are concerns about the illicit use of cryptocurrency and the potential threat it poses to traditional banking, there is currently no evidence to suggest that regulators are attempting to force banks to cut off their services to cryptocurrency businesses. Instead, regulatory bodies are focusing on providing guidance and ensuring that banks are complying with existing regulations.

FAQs

1. What is cryptocurrency?
Cryptocurrency is a digital or virtual currency that is secured using cryptography. It is decentralized, meaning it is not controlled by any central authority, such as a bank or government.
2. What is the difference between Choke Point and Choke Point 2.0?
Choke Point was a policy implemented by the Obama administration to crack down on fraud in high-risk industries. Choke Point 2.0 is the belief that regulators are attempting to use similar tactics against cryptocurrency businesses.
3. What is the NYDFS?
The New York State Department of Financial Services is a regulatory body that oversees financial institutions doing business in New York State.