Stablecoins are an important countermeasure to Operation Chokepoint

Promoting financial inclusion is one of crypto’s strongest value propositions. Yet, ironically, the banking crisis has effectively de-banked the crypto industry, at least in the United States.

That’s how things happened with Silvergate, Silicon Valley Bank and Signature – three crypto-friendly US banks – in what Nick Carter calls “Operation Chokepoint 2.0”. There is good merit to this claim, although detractors dismiss the conspiracy theory’s allegations with great vigor.

Signature, for one, didn’t suffer a bank run. The Federal Deposit Insurance Corporation still took over the bank in one fell swoop. The anonymous sources also alleged that the FDIC claimed that any buyer “must agree to leave all crypto business,” though the agency retracted those claims.

I don’t want to alarm, but since the beginning of the year, a new operation Choke Point type operation began in the US to target the crypto space. It’s a coordinated effort to marginalize the industry and cut off its connectivity to the banking system – and it’s working

— Nick Carter (@nic__carter) February 7, 2023

Crypto not only has the flexibility, but also the tools to fight back – by taking advantage of stablecoins to reduce bank dependency. Apart from solving the immediate crisis, it could also provide the basis for establishing crypto as a self-sustaining and parallel financial system. After all, that was Satoshi’s vision.

US regulators are shooting themselves in the foot

There’s a reason why most regulatory authorities – barring a few progressive jurisdictions – come with their guns blazing for crypto. Their power rests on a toxic relationship between oligarchies disguised as governments, money printers, large corporations, and banking systems. The non-intermediary, permissionless and autonomous systems that crypto enables threaten this anti-individual nexus at its very core.

Our journey toward a more equitable, person-centered world of crypto has never been easier. The hyper-aggressive response of the regulators is also in line with the expectations. But somehow the authorities, especially in America, don’t realize that their actions are self-destructive.

Connected: Did the regulators deliberately put pressure on the banks?

Technological advances have been instrumental in leading the US to its current position of dominance in global geopolitics. Emerging crypto-based technologies enable the next giant leap in this direction. And if regulators can overcome their greed for short-term power and control, they will see how stifling innovation is not in their best interests.

For example, the ongoing banking crisis, which is largely due to erroneous policy actions and selective enforcement, ultimately harmed financial stability in the United States. Furthermore, if this is indeed a coordinated effort to de-bank the crypto industry, the average American taxpayer is bearing most of the brunt, despite staying within legal limits.

Some projects have found a scalable way to help crypto firms become regulated institutions – such as ArcBlock, which seeks to leverage US-based community banks to expand on-chain “real-world asset” financing to regulated entities. Onboards for.

While this approach may eventually resolve some regulatory wrangles, a large section of the global crypto community is rooting for more radical solutions.

Crypto firms don’t need banks if they have a stablecoin

Stablecoins have been under a lot of scrutiny since Terra’s “algorithmic” coin, TerraUSD (renamed TerraClassicUSD), crashed last year, triggering a chain of events that partly led to the FTX fiasco. became the cause of The crash wiped out an ecosystem worth $40 billion, but it also delivered valuable lessons in due diligence, overexposure, and risk management.

Something like Operation Chockpoint 2.0, real or imagined, is possible, as crypto companies and investors use banks as on-ramps or off-ramps. There are practical reasons for this choice: for example, one cannot buy cryptocurrency with cash, and must pay with US dollars from their bank account. Even when using an exchange, they require bank transfers to deposit fiat.

Connected: The world may face a bleak future thanks to CBDCs

However, it is not necessary to involve the banks so much. Stablecoins can offer fiat token services for which crypto companies depend on banks with great risk and frustration. The process is not decentralized, but neither is banking for that matter. It is not about decentralization here as the goal is to combine centralized and decentralized finance while minimizing counterparty risks.

Former BitMEX CEO Arthur Hayes publishes a wealth of information blog in March on this topic in which he presented a detailed case for choosing stablecoins over banks. Most importantly, he proposed an innovative stablecoin model, which he called the Satoshi Nakamoto Dollar or Nakadollar (NUSD). The idea is to take advantage of bitcoin (BTC) and inverse perpetual swaps such as the NUSD that do not involve banks in the issuance or redemption process.

Proposals like the NUSD are indicative of regulatory uncertainty and our collective willingness to stand up to aggressive onslaughts. As crypto evolves, there will be less attack surface for regulators, and we will have more robust alternatives to legacy systems.

Innovation is not just a business model—it is our greatest strength. And it is through innovation that crypto will overcome all barriers. The show must go on because the coming generations deserve a better world.

This article is for general information purposes and is not intended and should not be construed as legal or investment advice. The views, opinions and opinions expressed here are those of the author alone and do not reflect or represent the views and opinions of Cointelegraph.