U.S. Congress Against Crypto Debanking: A Blow to Operation Choke Point 2.0

U.S. Congress against crypto debanking: A blow to Operation Choke Point 2.0, ending informal pressure on banks and normalizing digital assets' access to the financial system in a report by Republicans on the House Financial Services Committee. According to their assessment, supervisory practices under the Biden administration and regulatory uncertainty led to at least 30 participants in the crypto ecosystem losing access to banking services, while banks started to view work with digital assets as inherently too risky.

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How the Report Describes Debanking of Crypto Companies

The document defines debanking as the closure of bank accounts when a bank classifies a client as high risk and prefers not to work with them at all, instead of managing risk in a targeted way. This practice is linked with derisking, assigning high-risk status, and active use of Suspicious Activity Reports, which raises compliance costs for clients and creates the threat of a sharp break in relations with the bank without clear explanations.

The authors of the report stress that the crypto industry is particularly sensitive to this approach: without a bank account, payroll, taxes, and settlements with counterparties are blocked. Examples include crypto companies whose accounts major banks closed with minimal notice, after which other credit institutions refused to take them on as clients. The report notes that individuals associated with the industry, including founders of major projects, were also caught up in this process, which intensified the chilling effect and encouraged businesses to move outside the United States after the banking crisis of 2023.

Operation Choke Point 2.0 and a Policy Shift Under Trump

Republicans link policy toward the crypto sector under Biden to a revival of the logic of Operation Choke Point: there is no formal ban, but supervisory documents and informal signals from the Federal Reserve, FDIC, and OCC pushed banks to avoid work with digital assets. The Federal Reserve is criticized for letters SR 22-6 and SR 23-8 and the Novel Activities Supervision Program, which classified operations with stablecoins, custody, and other crypto services as "novel activities" and required separate approval and ongoing heightened supervision. According to the report, the FDIC used uncertainty around the status of crypto assets as an additional lever of pressure, while the OCC, after revisiting Trump-era letters, effectively placed any bank crypto services in a prior non-objection regime.

The SEC is accused of relying on regulation by enforcement: instead of a comprehensive regulatory framework, the Commission brought lawsuits against individual companies, without giving the industry clear guidance on how to comply with securities laws. Taken together, in the authors’ view, this created an environment in which even law-abiding market participants saw working with the U.S. banking system as a structural risk.

The report then records a policy shift associated with the Trump administration. The White House declares a goal to create "straightforward, commonsense regulation" for digital assets and to end debanking, while simultaneously advancing initiatives on payment stablecoins and market infrastructure. According to the document, the Federal Reserve announced a review and withdrawal of some letters, including SR 23-7 and SR 23-8, and emphasized that banks can serve clients working with digital assets and dollar tokens, provided they comply with safety and soundness principles. An important element is the decision not to treat reputational risk as an independent criterion in examinations, replacing it with more specific financial metrics.

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What the Report Signals for the U.S. Crypto Industry

In condensed form, the conclusion of the House Financial Services Committee report boils down to two points. First, the debanking of crypto companies is viewed as a consequence of vague supervisory criteria and regulatory uncertainty, which allowed banks and regulators to de facto push digital assets out of the financial system. Second, the Republican majority declares its intention to codify clearer frameworks in law for payment stablecoins and digital asset infrastructure and to limit the use of vague categories such as reputational risk.

Of course, this does not guarantee rapid change, but it sets an important political marker: further debates in Congress and among regulators will revolve around the line between managing AML and financial stability risks and impermissible debanking of lawful businesses that work with digital assets. Get more insights from our guides for beginners and professionals, and stay tuned for the latest updates and opportunities in the new economy, crypto industry, and blockchain developments!