Bitfury CEO Brian Brooks talks about Operation Chokepoint 2.0

WASHINGTON — The crackdown on crypto is real.

The big picture: Amid a broader effort to severely limit the crypto industry’s access to financial services like banking, “Operation Chokepoint 2.0 is the biggest story for the next six months,” Bitfury CEO and all-around policy expert Brian Brooks said Thursday.

Why it’s important: America’s political approach differs from the rest of the world. And according to an observation by U.S. Rep. French Hill (R-Ark.): “We cannot create a competitive economy unless we have a regulatory framework.”

Context: While developers and creators flocked to ETHDenver, a smaller, intimate gathering of decision makers, experts and people with skin in the game gathered in DC to discuss crypto regulation – or the lack thereof.

What we’re looking at: Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-NY) plan to reintroduce a strengthened but slimmer version of broad crypto legislation introduced last year.

Yes, but: Don’t call it pro- or anti-crypto, Gillibrand said: “We’re pro-consumer and pro-business.”

Status: Meanwhile, venture capitalists are struggling with the fundamental problem of not being able to send checks to the creators they think will build crypto’s next big thing.

• “Some [startups] can’t get bank accounts that we can actually fund,” said Brian Quintenz, Andreessen Horowitz (a16z) crypto’s head of policy.
• “The next wave of innovation is triggering an incredible amount of economic activity. And we can’t even get them the resources to build anything,” he added.

It begs an explanation of the philosophical debate at play here, Brooks said. “On one side of the debate, which is the winning side right now, there’s a view that we can’t have crypto in the banking system, because crypto would pose a risk.”

The intrigue: “‘Same risk, same regulation’ is being transformed into ‘same activity, same regulation,'” Brooks said.

• “The purpose of many crypto projects is to address some of the risks of the traditional system, in which case the same activity does not justify the same regulation,” he added.
• “Because regulation isn’t about activities, it’s about risk.”

Be smart: “Is the role of banking regulation to protect banks? Or is the reason we have banks to provide a supervised safe environment to conduct activities that are inherently risky,” Brooks said.

• Between the lines: He means the latter.

Bottom line: So why does the US political approach to crypto differ from the rest of the world? Brooks’ theory: Because the US has an “incumbent financial industry to defend.”