Republicans on the House Financial Services Committee have unveiled a comprehensive report alleging a coordinated effort by regulators from the Biden administration to debank numerous cryptocurrency firms. The 50-page document, characterized as “Operation Chokepoint 2.0,” accuses agencies, including the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), of employing subtle yet impactful measures to discourage banking institutions from engaging with the crypto sector.
The report underscores well-known practices such as informal guidance and pressures by regulatory bodies, alongside pinpointing at least 30 entities that have reportedly been side-lined from the U.S. banking ecosystem without the necessity of formal enforcement actions. This, the report suggests, indicates a coercive environment shaped through informal channels.
The report outlines various tactics utilized by federal regulators to steer banks away from associations with cryptocurrency, including “non-objection” letters and “pause” letters, which serve to create an atmosphere of hesitance regarding banking relationships with crypto companies. Particularly, the Securities and Exchange Commission (SEC) has been criticized for adopting an “enforce first, make rules never” strategy, relying on selective enforcement to limit digital asset operations rather than establishing clear frameworks.
A key point of contention in the report is the SEC’s SAB 121 guidance, which effectively prevents banking institutions from offering custody services for crypto assets. The findings suggest a stark contrast between regulators’ public denials of any bias against digital assets and the alleged private pressure exerted on banks to disengage from relationships with crypto enterprises. Evidence presented in the report indicates a consistent pattern of informal coercion, challenging the stated intentions of the regulators involved.
Republicans on the Committee liken this approach to the previous Operation Choke Point, a controversial initiative from the early 2010s aimed at exerting regulatory and reputational pressure to discourage banks from servicing specific high-risk industries. The report argues that the methods employed against crypto firms mirror those of the earlier program, featuring opaque supervisory expectations and warnings about reputational risks associated with banking certain entities.
A committee spokesperson expressed concern over the current regulatory climate, stating, “The lack of clear rules combined with aggressive enforcement has created a chilling effect on the digital-asset sector. Legitimate American businesses were forced to move abroad or shut down, not because of wrongdoing, but because of regulatory overreach.”
The report also includes anecdotes from executives at various crypto firms, detailing their struggles with banking relationships, including repeated requests for documentation and abrupt account closures. One account shared described being effectively expelled from the U.S. banking system following a routine regulatory filing, highlighting the perceived unpredictability and arbitrary nature of regulatory scrutiny.
Republicans conclude the report by advocating for a reversal of the current policies, calling on Congress as well as the Biden administration to implement explicit guidance aimed at supporting legitimate crypto firms. The overarching goal, they assert, is to ensure these companies have uninhibited access to banking services without the fear of incurring undue regulatory pressure.
The full report is accessible on the House Financial Services Committee’s website for those interested in an in-depth examination of the findings.
