Published: January 21, 2025 at 7:14 am
Updated on January 21, 2025 at 7:14 am
A lot of crypto traders in the USA woke up to a disappointing reality on Donald Trump’s first day back in office. He didn’t repeal Biden’s Executive Order 14067, which initiated Operation Choke Point 2.0. This leaves many of us wondering what this means for the future of crypto trading platforms in the US. Regulatory stifling is a familiar foe, and the political arena continues to dictate the course of digital currency trading.
Trump announced the repeal of 78 executive orders. But guess which one he didn’t touch? EO 14067, Biden’s executive order from March 9, 2022, that set the stage for Operation Choke Point 2.0. This order has been like a thorn in the side for crypto platforms in the USA. It directed agencies to dive deep into the risks and benefits of digital assets, including a potential central bank digital currency (CBDC), while also laying the groundwork for a federal crackdown on our industry.
We were all hoping he’d take it down with him, especially since he mentioned it on the campaign trail. His failure to act has left many feeling betrayed, including financial expert Adam Cochran, who vented his frustrations online about career officials still having power to overreach against crypto-related entities.
The original Operation Choke Point under Obama was aimed at rooting out fraud and money laundering by investigating banks’ ties to high-risk industries. Trump had ended it back in 2017, but now, Biden resurrected it to target the crypto sector.
Operation Choke Point 2.0 has dramatically affected the crypto industry. Critics say it created a hostile environment with federal regulators, including the SEC, FDIC, and OCC, pressuring banks to cut services to crypto firms. This makes life hell for crypto trading platforms trying to access basic banking services.
The impact was laid bare with the collapse of Silvergate Bank and Signature Bank, both major players in crypto banking. They struggled under regulatory pressure and eventually went under. Signature’s demise was a massive red flag from regulators against banks dealing with crypto.
Regulatory overreach is a cloud hanging over new crypto trading platforms. Unclear and inconsistent regulations create a minefield for these platforms, preventing them from operating smoothly. Regulatory hostility, with aggressive enforcement actions, ramps up compliance costs and risks.
The SEC’s ad-hoc enforcement actions, often without clear reasoning, have bred confusion and eroded trust. Rather than deterring, it has pushed some activities offshore or underground. This regulatory haze has hurt investor confidence, leading to increased selling pressure and price drops.
High-profile cases of fraud have highlighted shaky reporting standards. Without consistent regulations, new trading platforms struggle to find their footing in this complex environment.
Political decisions are pivotal in shaping the regulatory climate for crypto. Changes in administration can lead to drastic shifts in policies.
Trump’s administration had a more welcoming stance toward cryptocurrencies, pledging to ease regulations. In contrast, Biden’s administration has taken a firmer line, focusing on consumer protection and clamping down on financial crimes.
Congress has seen bipartisan efforts to clarify regulations for digital assets. Bills like the Responsible Financial Innovation Act (RFIA) and the Digital Commodities Consumer Protection Act aim to bring digital assets under existing laws while protecting consumers.
State regulations have also been a factor. Many states have modified their money transmitter regulations to include virtual currencies, requiring licenses. State coalitions have acted against firms like Coinbase and Nexo for state securities law violations.
Political contributions and lobbying efforts have shaped the regulatory landscape. Pro-crypto super PACs and industry leaders have backed candidates championing crypto-friendly policies. This raises concerns about a political climate favoring digital finance interests over broader financial system security.
Trump’s inaction on EO 14067 has left the crypto community in a lurch. Operation Choke Point 2.0 and regulatory overreach are still major hurdles for crypto trading platforms in the US. Political decisions will continue to play a crucial role in shaping the future of digital currency trading.
The crypto market is evolving, and as it becomes more intertwined with the broader financial system, we need to find a balance that fosters innovation while also protecting consumers. Clear regulations are essential for establishing a stable environment for crypto businesses to thrive. The crypto community must stay alert and advocate for policies that support innovation and investor protection.
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