Yesterday, the US Supreme Court issued two important cases that will likely have wide-ranging impacts on Bitcoin and cryptocurrencies. Decisions are National Rifle Association of America v. Volo (Natural Resources Authority) And Cantero, et al. Fifth. Bank of America, NA (stonecutter).
in Natural Resources Authority, the Court addressed a crucial issue that affects not only traditional advocacy groups, but also any undesirable, but legal, industry. The ruling is similar to Operation Choke Point 2.0, where US regulators allegedly targeted cryptocurrency companies through financial exclusion. Moreover, the last stonecutter The decision sheds light on how this legal framework affected Custodia Bank's appeal against the Fed's denial of its key account.
Natural Resources Authority case
The National Rifle Association (NRA) has filed a lawsuit against former New York Department of Financial Services (DFS) supervisor Maria Vullo, alleging that she used her regulatory authority to force financial institutions to sever their ties with the NRA. The National Rifle Association claimed this was an unconstitutional suppression of First Amendment rights.
Vuolo alleged that her actions targeted business practices and relationships, which she claimed was “non-expressive activity” rather than speech, and as such was not unconstitutional coercion. However, the Supreme Court found this argument to be misplaced. “Vullo’s regulation of business activities arising from the NRA’s relationships with insurance companies and banks does not change the allegations that its actions were intended to punish or suppress expression.” be seen Natural Resources Authority Decision, page 17 (internal citations deleted, emphasis added).
The Supreme Court reversed the Second Circuit's decision in favor of Vullo and remanded the case, once againThat government officials may not use coercion to punish or suppress unwanted speech or advocacy indirectly.
Choke point process
Operation Choke Point was a Department of Justice (DOJ) initiative intended to “choke” companies deemed high-risk by denying them access to banking and payment networks. Although these companies, such as firearms dealers, payday lenders, and adult entertainment, were legal, the Justice Department pressured banks to end relationships with them, citing “reputational risk.” This initiative effectively forced banks to comply under the threat of federal investigation, significantly impacting legitimate companies in various industries. FDIC Finally Resolve a lawsuit Related to Operation Choke Point in 2019.
Operation Choke Point 2.0, a term coined to describe alleged actions taken by US regulators against the cryptocurrency industry, involves a series of informal directives and regulatory pressures targeting financial institutions to limit or terminate their relationships with cryptocurrency companies. This echoes the original, And illegalOperation Choke Point, which targeted industries such as payday lending and firearms sales, without due process or clear legal justification.
Just as in Natural Resources AuthorityOperation Choke Point 2.0 involves regulatory authorities overstepping their bounds and using undue influence and outright coercion against unwanted, but lawful, actors. Natural Resources Authority Emphasizes that such overreach, especially when used to suppress particular viewpoints or industries, is unconstitutional. In both scenarios, regulators are accused of using their power to impose an ideological position rather than following explicit legal mandates.
The crux of the NRA's argument was that Vullo's actions were a violation of his First Amendment rights. Likewise, if regulators target cryptocurrency companies due to an unfavorable view on decentralization and financial independence, this could constitute a similar violation. The Supreme Court's decision confirms that indirect suppression of expression through coercion is unconstitutional.
Natural Resources Authority It also highlights important due process issues, whereby affected entities are denied a fair opportunity to defend themselves against secretive regulatory actions. Cryptocurrency companies are facing sudden account closures and banking restrictions without clear explanations or recourse, mirroring the NRA's experience, raising serious due process concerns.
Finally, and this is a bit of speculation, now that the Supreme Court has clearly stated it, one could argue that qualified immunity should not extend to government officials who willfully violate the Constitution when they coerce or attempt to coerce a violation of the First Amendment. rights. Lifting qualified immunity means those officials could then be detained Personally Responsible for violating the Constitution.
the stonecutter The decision and its effects on the custodial bank
the stonecutter The case concerns Bank of America, a national bank, and whether it is required to pay interest on escrow accounts as required by New York State law. The Second Circuit Court dismissed the case based on the argument that the New York law was overridden by federal laws, but did not engage in the full analysis required for this case. The Supreme Court ruled unanimously that although preempting state laws that significantly interfered with the powers of national banks, Congress had provided a detailed process, outlined in the Dodd-Frank Act, for determining whether preemption was appropriate. The court reversed the Second Circuit's ruling, requiring the circuit court to fully participate in a comprehensive review of the cases.
In the context of this ruling, the Court reiterated the following:
The United States maintains a dual banking system, consisting of parallel federal and state banking systems. This dual system allows privately owned banks to choose whether to obtain a charter from the federal government or from the state government.
Banks with federal charters, called national banks, are primarily subject to federal oversight and regulation. Banks with government charters, called state banks, are subject to additional state oversight and regulation. These two banking systems coexist and compete.
stonecutter It asserts that a finding of significant interference by state laws in national banking authorities requires careful analysis consistent with the Dodd-Frank Act and prior Supreme Court precedent, and at a high level both explicitly and implicitly asserts that the dual banking system is alive and well.
However, if the Fed could exercise more than ministerial discretion in denying the prime accounts of state-chartered banks, the entire existence of the dual banking system could become invalid. Going forward, if regional Federal Reserve Banks indeed have arbitrary discretion to grant or deny master accounts (as Judge Skavdahl held in the Custodia case) Local court decision), and just as the Federal Reserve Bank of Kansas City has asserted that regional reserve banks are private, the same undue influence and coercion arguments that Natural Resources Authority It can also be borne here.
Conclusion
Supreme Court decisions in Natural Resources Authority And stonecutter Both provide steps toward addressing federal overreach related to Bitcoin, affecting both the Choke Point 2.0 process and Custodia Bank's access to the financial system. while Natural Resources Authority Immediately useful, and I believe it will be used in short order to attack aspects of the Choke Point 2.0 operation, de-banking legal but disfavored industries and individuals, stonecutter It seems to indicate that Custodia is on solid ground in its appeal. But on a more general level, it also reveals the unrestrained nature of the modern administrative state that we also saw deployed against Bitcoin mining in the EIA case.
Small victories, yes. But like stacking satellites, they build.
This is a guest post by Colin Crossman. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.