Call it CPR for Operation Choke Point.
The U.S. Office of Comptroller of the Currency, led by national bank regulator Brian Books, a former coinbase adviser, suggests a rule that would prohibit banks from blacklisting legal entities, possibly including cryptocurrency companies.
Under the proposed rule, banks can only refuse financial services to customers on the basis of “pre-established quantitative, risk-based standards”, not in response to political pressure.
The proposal, published Friday in the Federal Register, does not mention cryptocurrency. U.S. Ruperigate Bank, Signature Bank and Metropolitan Commercial Bank, which have long struggled to get bank accounts in crypto companies, have the potential as welcome news to businesses in the space. Among them – for their basic banking needs.
On the other hand, if banks in the world’s largest economy were banned from discriminating against legitimate businesses, then, equally, it would, in principle, undermine the appeal of an unauthorized, censorship-resistant payment system like Bitcoin.
The OCC’s proposal specifically mentions Operation Operation Square Point, an initiative of the Obama-era Justice Department that was supposed to shut down only fraudulent businesses and payers by forcing them to close their bank accounts. In practice, there appears to be widespread collateral damage.
According to the OCC’s proposal, government agencies (but not the OCC), banks were pressured to stop using financial services in disorganized (but not illegal) sectors of the economy. These include the firearm and coal industries. Operation Operation Chowk Point officially ended in late 2017, but financial intermediaries are still under pressure from politicians and the public for unbanked businesses or individuals considered inadvisable or problematic.
In his proposal, the director cited examples of pressure on banks by political boycotts to stop providing financial services to family planning organizations or shotgun and rifle manufacturers.
“Neither the OCC nor banks are equipped to balance the risks of financial exposure and not related to operations required to deliver financial services,” the regulator wrote. “Climate change, for example, is a real threat, but the U.S. There is a risk of foreign wars and blackouts due to energy shortages as part of energy dependence … Balancing these risks is the job of Congress and federal energy regulators and environmental regulators. ”- In other words, not financial regulators or institutions.
The proposal is open for public comment by January 4.
This week, US President Donald Trump appointed Brooks as the permanent head of the OCC for a five-year term. Congress has yet to vote on the nomination, which is expected to be filled by President-elect Joe Biden if Brooks is not nominated by January 20, 2021.
