Key Takeaways
- Operation Chokepoint 2.0 refers to an alleged conspiracy among regulators and major financial institutions that worked to suppress the US crypto industry through debanking and other unscrupulous methods.
- The US Federal Reserve has denied financial institutions tied to crypto or cannabis access to its “master accounts.”
- Reports indicate that at least four of America’s biggest banks account for around half of all debanking complaints filed by crypto industry players.
The US Federal Deposit Insurance Corporation (FDIC) has released a gigantic pile of documents that appear to implicate leading American banks and US regulators in denying the cryptocurrency industry players’ services in a dubious operation dubbed “Operation Chokepoint 2.0.”
According to at least 175 documents released by the acting FDIC Chair Travis Hill signaling that allegations about “Operation Chokepoint 2.0” were accurate, at least 25 “pause” letters were sent to banks and financial institutions under FDIC supervision in 2022 asking them to cease “all crypto asset related activity. Per the FDIC, the documents they released indicate that the requests were “almost universally met with resistance.” Commenting following his statement, Hill explained:
“I have been critical of the FDIC’s approach to crypto assets and blockchain. As I said last March, the FDIC’s approach ‘has contributed to a general perception that the agency was closed for business if institutions are interested in anything related to blockchain or distributed ledger technology.”
Pause, Suspend, Refrain
Hill explained that while the banks were keen on working with the crypto industry, the FDC held to its ideology and refused to engage or meet for information, leading to months of silence. What followed were more directives asking the banks and financial institutions to “pause, suspend, or refrain” from expanding blockchain and crypto activities.
Apart from the crypto industry, there has been fear that Operation Chokepoint 2.0 could quickly spread the debanking phenomenon to other American citizens based on the nature of their legal businesses, religious creed, political leanings, and other similar affiliations.
Four Banks Implicated
While giving her opening remarks during the hearing, Senator Elizabeth Warren observed that the US President had encountered “a real problem” when he previously called out the Bank of America for debanking at Davos. According to Warren, staff working in her office has found documents that allegedly implicate three leading banks, namely, Citibank, JP Morgan, and Wells Fargo, stating that they account for half of all debanking complaints made to the Consumer Financial Protection Bureau. Commenting following Hill’s exposure, South Dakota Republican Senator Mike Rounds stated:
“These banks want to look for business, but because of a regulatory environment that they have been in, they have been forced to decide whether they want to do business with certain industries.”
Conclusion
The release of the documents by the FDIC chair that show Operation Chokepoint 2.0 coincides with other positive developments that the Trump administration is undertaking to try and rectify the many wrongs undertaken against crypto industry layers in the past. During his campaign for the presidency, Trump pledged to dismantle Operation Choke Point 2.0, which allegedly targeted the crypto industry by limiting its banking access. The action goes on to further strengthen the feeling that the new administration is serious about the desire to liberate the crypto sector and work towards making America the crypto capital of the world.
