OKX Executive Warns on Risks of Debanking and Urges Users to Build Strong Relationships
Operation Chokepoint 2.0: The Debilitating Threat to Cryptocurrency
The cryptocurrency industry has faced a significant threat in recent times due to Operation Chokepoint 2.0, a move by traditional banking systems to exclude crypto-related businesses from their services. This article delves into the risks posed by this operation and explores how crypto companies have been affected.
A Strategic Safeguard Against Debanking Threats
Jason Lau, Chief Innovation Officer at OKX, a leading cryptocurrency exchange and self-custody wallet provider, has emphasized the importance of building strong partnerships with banks and key financial stakeholders. According to Lau, these relationships serve as a strategic safeguard against potential debanking threats.
Lau explained that traditional banking systems are heavily based on trust, which requires relationship-building with regulators, banking institutions, and other stakeholders. He stated: "You need to take the time to build relationships with all your stakeholders, including regulators and your banking partners. We’ve spent years and years working with our partners and stakeholders to make sure they understand our business."
The Debilitating Effects of Operation Chokepoint 2.0
Operation 2.0 debanking stories have been numerous, with many originating from the United States and US-based entities. However, debanking is a global problem that affects businesses, technological innovation, and freedom of speech.
A heavily redacted FDIC notice has revealed the extent to which banks are being instructed to pause crypto-related activities. The document, obtained by Cointelegraph, highlights the risks posed by Operation Chokepoint 2.0.
Debanking Around the World
The debanking problem is not limited to the United States. According to Ben Rose, former regional manager of Binance Australia, the exchange received only 12 hours’ notice before being debanked. The reasons for this abrupt decision were unclear.
In July 2023, leaked documents revealed that UK politician Nigel Farage was debanked due to his political views. This incident sparked a proposal by UK politicians to strip banks of their licenses if they violated freedom of speech.
The UK government has since laid out several consumer-protection provisions for banks, including:
- A three-month notice period before account closures
- An explicit reason for account closure
- The opportunity for customers to appeal the closure
Despite these measures, crypto companies continue to report being turned away by UK banks. Common problems include excessive paperwork, account freezes, and application rejections without sufficient reasons.
The issue has become so widespread that crypto industry executives have brought it to the attention of former UK prime minister Rishi Sunak. However, crypto firms and projects are still reporting the same issues in 2024.
Debanking: A Growing Concern
The problem of debanking has been so pervasive that it made the Collins Dictionary shortlist for words of the year in 2023 due to its widespread usage in online circles and digital culture.
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