The Trump administration has been stepping up pro-crypto regulation in recent months and is now moving to curb banking discrimination against crypto firms.
Summary
- The White House is reportedly preparing an executive order to curb crypto debanking.
- Internal policies tied to “Operation Chokepoint 2.0” are expected to be reviewed or scrapped.
- Authorities are working to improve the regulatory environment for digital assets in the United States.
According to a Tuesday Wall Street Journal report, the White House is preparing an executive order aimed at investigating and cracking down on financial institutions that deny services to crypto companies based on regulatory pressure or political bias.
The draft order, which could reportedly be signed this week, comes in direct response to what the crypto industry has described as ‘Operation Chokepoint 2.0,’ a coordinated effort under the previous administration to push banks to quietly sever ties with crypto businesses.
If signed, federal banking regulators will be required to investigate whether firms violated consumer protection, antitrust, or credit access laws when cutting ties with crypto-linked clients. Institutions found guilty could face penalties such as fines, consent decrees, or even DOJ referrals in extreme cases.
‘Operation Chokepoint 2.0’ explained
During the Biden era, the crypto industry faced significant pressure from regulators, championed by the US Securities and Exchange Commission under former Chair Gary Gensler’s leadership.
The pressure soon escalated, as multiple federal agencies, including the Federal Deposit Insurance Corporation (FDIC) and Department of Justice (DOJ), allegedly encouraged banks to cut off services to crypto-related businesses. This was often done behind closed doors, and with no clear explanations to those affected.
The coordinated effort was first called out by venture capitalist Nic Carter in 2023, who found that regulators, under the direction of the Biden administration, were using their influence over the banking system to wage a quiet but aggressive crackdown on the crypto industry.
“The US government is using the banking sector to organize a sophisticated, widespread crackdown against the crypto industry,” Carter explained. “The Biden administration is now executing what appears to be a coordinated plan that spans multiple agencies to discourage banks from dealing with crypto firms. It applies to both traditional banks who would serve crypto clients, and crypto-first firms aiming to get bank charters.”
Industry members like Kraken founder Jesse Powell and Tyler Winklevoss from Gemini have shared personal stories of being caught in the crackdown, explaining how their companies and groups affiliated with them were debanked with no clear justification.
“I was debanked because I’m in crypto, as was Gemini,” Winklevoss wrote in an X post.
a16z co-founder Marc Anderseen also revealed in a November 2024 Joe Rogan podcast that over 30 tech founders fell victim to these government-led debanking campaigns, further stressing the extent of the crackdown on the industry.
Lawmakers have recently pointed to the Federal Reserve’s role in the scheme. In July, Senator Cynthia Lummis criticized the Fed for either standing by or directly blocking industry access to critical infrastructure like Fed master accounts. Several crypto firms reported that their applications were denied or delayed with no clear justification, reinforcing the view that the central bank quietly helped sideline the industry.
Under the White House’s new direction, the previous administration’s disdain for the crypto industry and its tangential relationship to banks and other financial services are now coming under increased scrutiny. The executive order is also expected to instruct regulators to scrap all internal policies that may have contributed to the debanking to prevent recurrence.
Regulators have often defended their tough stance on crypto by pointing to the risk of misuse and illicit activity. But industry voices argue that this logic is flawed.
“Yes, as in any industry, there are bad actors,” Carter has opined of crypto. “But choosing to shape crypto banking policy purely through the lens of these actors is akin to debanking the asset management industry over Bernie Madoff, or debanking energy companies because of Enron.”
