10th August 2025 > > Operation Choke Point.

tl;dr

Depending on where you are in the world, you may rejoice, be saddened, or continue to be terrified.

Market Snap 

Market Wrap

ETH is on a tear, for reasons we discussed just two days ago. It does look that the ATH of close to $5k might be seriously breached as soon as this week.

Curious Cryptos’ Commentary – The death of Operation Choke Point

Rejoice! Operation Choke Point has finally been killed.

Operation Choke Point was an attempt – and a highly successful one at that – of restricting or destroying certain types of business, not by prosecuting an argument in favour of making those activities illegal, but by cutting off access to the financial system. It was a means by which moral judgements made by certain individuals, or by the bureaucratic mindset, were imposed on the population, without resorting to the tricky task of convincing anyone of the merits or otherwise of stopping particular activities.

It was clearly a total derogation of any principles of democracy, and a road that would lead to a very dark place if travelled.

If you don’t believe me, let’s try a little thought experiment. Imagine a favoured activity of yours, a perfectly legal one, though someone claims they inhabit a moral high ground that allows them to effectively stop your enjoyment on their say-so. That would be more than a touch annoying.

Or imagine a human rights principle you hold dear. Taking one at random, the status of the principle that women have rights over their own bodies, and that of an unborn child in certain situations. A topic that is highly inflammatory, which is why it is useful to consider.

Abortion is legal in the U.S. at a federal level despite the mis-reporting of the Roe vs Wade situation. There are some states that do ban abortions, and there are some that don’t. The politicians in each state stand for election on a whole range of issues, including this one. Everyone is entitled to say their piece on this emotive and divisive subject. For the record, my libertarian bent is to the fore, but I also recognise that not everyone agrees with me.

The very worst means of approaching this topic would be to have a federal government that stops banks from dealing with any medical firms that are involved in any way at all with abortions simply because one or more influential individuals take a moral stance. That would be to make it illegal by the back-door.

Such an approach cannot be acceptable in any democracy, on any topic at all. Looked at in this light, the sheer ugliness of the dystopian world created by the mere concept of Operation Choke Point becomes immediately apparent.

Which is why Operation Choke Point was wrong on all levels.

…

Trump has many detractors, and rightly so. Daniel Hannan, a man who is always very thoughtful, and very reasoned in his arguments, today posits in his weekly column that Trump is the gravest threat to the world order since 1945, a period that “lifted our species to unprecedented heights of peace and prosperity”. You may agree or not with him, and it would be fair to point out that there has been an unequal distribution of that peace and prosperity, but the nuance is that those parts of the world which have not shared in these spoils cling to the pre-WWII system of governance. That article is a damning indictment of Trump, and well worth a read.

Getting back to cryptos, which is our major concern in these missives, what we do know is that Trump has been a force for good for the crypto industry. The strides made have been very impressive, and we still have another three and half years of this. By the time he steps down, the crypto revolution will be embedded in everyone’s lives, and for that we should be grateful.

Not unrelated is that Trump has killed Operation Choke Point, and its variant aimed specifically at cryptos, with a new Presidential Order:

https://www.whitehouse.gov/fact-sheets/2025/08/fact-sheet-president-donald-j-trump-guarantees-fair-banking-for-all-americans/

Banks, and the executives at those banks, will suffer financial penalties and reputational loss if they restrict banking facilities to perfectly lawful activities. This is how the world is supposed to work. In the open, and open to debate, not engineered in the background by someone who believes they inhabit a higher moral plain than us mere plebs.

Curious Cryptos’ Commentary – The revival of Operation Choke Point

The CCC has long been an admirer of MiCA, a ground-breaking piece of pro-crypto regulation implemented by the EU, long before the US made its pivot.

But the bureaucrats know no bounds in their mission to obstruct freedom and liberty.

The EBA (European Banking Authority), a shadowy organisation whose recruitment policy is unknown to us, and one which wields enormous power over the near half a billion people who live in the EU without them even being aware, has introduced its own Operation Choke Point aimed at preventing banks themselves being involved in cryptos:

https://www.eba.europa.eu/publications-and-media/press-releases/eba-publishes-draft-technical-standards-prudential-treatment-crypto-asset-exposures-under-capital

Risk weighting of assets on a bank’s balance sheet is an arcane subject, one that determines much of the activity of any bank. For instance, a risk weighting of zero is applied to all investment grade government bonds, encouraging banks to invest in their own government’s debt. With 10-year yields increasing by 400 basis points or more over recent years, causing a 40% drop in the value of 10-year bonds, the idea that these are risk-free is simply delusional.

At the other end of the scale, this new regulation states that banks must hold 1,250% capital against “risk weight group 2b”, the most draconian restriction on a group of assets that includes cryptos.

What does this mean in practice?

Let’s take Italian bank Intesa Sanpoalo, which earlier this year bought EUR 1mm of BTC for its own balance sheet. Clearly the trade is in profit now. What is just as clear is that the total cash loss could never be more than EUR 1mm, in the unlikely event that BTC goes to zero.

However, the new rules state that the bank must hold EUR 12.5mm of assets in the form of cash or government bonds, against this frankly impossible outcome. No bank would ever do that trade.

This is Operation Choke Point writ large.

Curious Cryptos’ Commentary – Operation Choke Point never went away

Here in the UK, we look enviously at both the EU and the US.

Operation Choke Point continues in full swing, and I should know. Take it from me, it is impossible to open a bank account for a company that is solely focussed on crypto activities. This terrifying world we are forced to live in shows no sign of changing any time soon.