Congress is launching an investigation into allegations that U.S. banking regulators are systematically cutting the cryptocurrency industry out of the financial system, a situation referred to as Operation Chokepoint 2.0. This inquiry follows numerous reports from crypto businesses struggling to secure banking services.
Historically, large banks have been hesitant to engage with crypto firms. This reluctance intensified under the Biden administration, where claims surfaced that federal agencies were pressuring banks to limit or deny services to cryptocurrency-related businesses.
In early February, both the House Committee on Financial Services and the Senate Banking Committee held hearings on this matter, featuring testimonies from industry executives. The hearings aim to determine whether a coordinated effort exists to debank crypto firms.
Operation Chokepoint 2.0 draws its name from a previous initiative during the Obama administration that targeted certain industries, including pornography and payday lending. Critics argue that the current regulatory environment has created a functional ban on crypto businesses seeking banking services.
Recent documents released by the Federal Deposit Insurance Corporation (FDIC) reveal communications with banks regarding the crypto sector, raising concerns about the perceived pressure on financial institutions to avoid crypto clients. While the FDIC maintains that it does not direct banks to refuse accounts, the documents suggest a cautious approach that may discourage banks from servicing crypto companies.
As the investigation unfolds, industry stakeholders are advocating for reforms, including greater transparency from banks regarding account closures. The outcome of this inquiry could significantly impact the relationship between the cryptocurrency sector and traditional banking institutions.
For more details, visit the original article on Wired.