Operation Choke Point 2.0 has been more visible than ever as a result of recent moves by US authorities against the US crypto sector. The US Securities and Exchange Commission (SEC) is at the heart of the effort, having recently issued a Well Notice to Coinbase. They also filed a lawsuit against crypto entrepreneur Justin Sun for fraud and other securities law breaches.
So far, oversight of SEC activities by the US Congress has been almost non-existent. This, however, is about to change. Patrick McHenry, chairman of the Financial Services Committee, told Punchbowl News that SEC head Gary Gensler will have to go before the committee for the first time on April 18 to defend his actions.
‘Republicans will hold Gary Gensler accountable for his flagrant disregard for the law, jurisdiction, and the APA.’
The House Financial Services Committee is in charge of overseeing all areas of the financial services industry in the United States, including banking, securities, and digital assets. North Carolina Republican Patrick McHenry took an oath for office in 2023.
The SEC is spearheading the charge to subject cryptocurrency marketplaces to the entire range of financial rules that the SEC controls. SEC Chair Gary Gensler stated in April 2022 that the top five exchanges representing 99% of bitcoin trading “likely are trading securities” and should register with the SEC and comply with applicable laws. Gensler has advocated for enhanced financial regulation enforcement for stablecoins and other cryptocurrencies.
During his interview, McHenry mentioned that this will be the SEC’s first oversight hearing. The hearing will centre on Gensler’s regulations and his stance on digital assets. He went on to say that the committee would have broad general oversight of the SEC and would take a serious effort to establish a “regulatory sphere for digital assets”.
Shortly after, in January 2023, he formed the Digital Assets Subcommittee to address the structural gap in the House Financial Services Committee’s handling of cryptocurrency concerns. The panel is chaired by Republican Representative French Hill, while his deputy is Republican Representative Warren Davidson.
The SEC chief’s stance on cryptocurrency has raised many eyebrows over the years, and several Democrats have expressed alarm about it. Many in the cryptocurrency sector fear that the party’s anti-crypto position will be detrimental to its 2024 election campaign.
According to Dennis Porte, co-founder of the Satoshi act fund, numerous pro-crypto and pro-Bitcoin Democrats are lined up to express their displeasure with their own party’s attitude. Davidson is one of Gensler’s harshest opponents, and she recently tweeted that “Fire Gary” should become a bipartisan campaign.
McHenry wants to make supervision of the SEC a key element of his chairmanship, and he wants to give Gensler greater congressional scrutiny than he has in the past. McHenry also stated that he will be actively monitoring the subject of crypto asset regulation in the coming months. “I’m glad we were able to announce it and get it started.” “This will be the first of many regulatory hearings this summer,” the chairman added.
Cooper & Kirk, the law firm that successfully sued the FDIC, OCC, and Fed over the initial Choke Point 1.0 operation in 2014, outlines how financial authorities are employing the same illegal threats and pressure methods on the crypto business in 2023 as they did back then. With the start of 2023, US regulators have taken a harsh stance on crypto, with the SEC sending a Wells notice to a number of crypto businesses, including Coinbase and Kraken. However, the crypto community has long emphasised that rules will be set by Congress rather than specific agencies.
