Operation Choke Point has negatively impacted a number of small-business owners. They have their bank accounts closed and credit lines cancelled.
Shutting Down Merchant Accounts
Operation Choke Point is an initiative by the US Department of Justice, which was announced in 2013. It aims to investigate US banks and the business they are running with payday lenders, payment processors, and other companies considered high risk.
Many small-business owners state their bank accounts have been closed and credit lines cancelled. They claim to have been running completely legal and legitimate businesses. Owners of gun shops and tobacco stores have provided testimony to Congress.
In 2014, businesses dealing with escort services, drug paraphernalia and pornography were also labeled as high risk by the Federal Deposit Insurance Corporation (FDIC). Based on the original list of high-risk businesses, many banks shut down the accounts of business owners who hadn’t done anything illegal.
According to the FDIC, the unintended consequence of closing legitimate small-business operations was caused by a misunderstanding of the FDIC’s high-risk list from the part of several banks. In January 2016, the FDIC required all banks to review customers on a case-by-case basis instead of just blocking banking services for certain types of businesses. The victimized small-business owners weren’t satisfied by the remark.
Could Bitcoin Save the Situation?
With this in mind, small-business owners should choose their payment processor with exceptional attention. Highly reputable merchant account providers like emerchantbroker.com offer the best for high-risk businesses. EMB, #1 high-risk processor in the US, is an ideal company to apply for services concerning high risk credit cards.
Some people believe Bitcoin can be the right solution to the situation. In fact, business owners aren’t willing to hold Bitcoin after a sale, and a bank account is required for using a service to instantly convert Bitcoin to dollars at the POS. On the other hand, the number of consumers holding Bitcoin isn’t large enough. So, accepting cash in a situation like this would more preferable, though that may cause a new risk of where that cash is going to be stored.
Others think using Bitcoin for peer-to-peer lending could help those small-business owners whose lines of credit had been cut off. However, it’s doubtful if such a specific case is enough to deal with actual business loans in this situation. Bitcoin could be a way out in the future. Today, it feels like the technology isn’t ready enough to help cope with a situation of this type.
The problem lies in the fact that funds can be seized and transactions can be banned by governments and banks at any given time.