On April 25, the Federal Reserve announced a major decision: to revoke the 2022 regulatory guidance on banks crypto assets and US dollar token businesses, abolish the relevant regulatory no objection procedures in 2023, and withdraw from the policy statement on crypto asset business risks previously issued jointly with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC).
Operation Choke Point 2.0 to Marginalize the Crypto Industry
Choke Point 2.0 is the crypto industrys collective name for a series of banking regulatory policies during the Biden administration. The name comes from the Choke Point Operation in the Obama era, which refers to achieving regulatory goals by putting pressure on banks to cut off financial services for specific industries.
In the crypto market, Operation Choke Point 2.0 generally refers to the period from 2022 to 2023, when the main U.S. financial regulatory agencies - the Federal Reserve, FDIC and OCC - adopted a series of guidelines and policy statements to strongly discourage banks from engaging in crypto-asset-related businesses, indirectly restricting the connection between crypto companies and the traditional banking system.
It all started in 2022 when the Federal Reserve issued a regulatory letter requiring state member banks to file prior reports before conducting crypto asset business. This seems to be a procedural requirement, but in fact it has greatly increased the threshold for banks to enter the crypto field.
By early 2023, regulation had escalated further. The Federal Reserve, FDIC, and OCC jointly issued a statement that made it clear that issuing or holding crypto assets on a public, decentralized network was highly likely inconsistent with safe and sound banking practices. In the same year, regulators also required banks to obtain no objection permission from regulators in advance when engaging in dollar token (i.e. stablecoin) business. This process is not only complicated and time-consuming, but also provides regulators with a veto power.
As a result, many people call this wave of regulatory pressure Operation Choke Point 2.0. Nic Carter, the former first crypto asset analyst at Fidelity Investments, described this series of actions as a sophisticated and extensive crackdown on the crypto industry through the banking system in an in-depth analysis.
He pointed out that the goal of regulators is to cut off the connection between crypto companies and the legal currency system by making it more difficult for banks to serve the crypto industry. This not only restricts the account opening and payment channels of crypto companies, but also has a serious impact on the legal currency in and out channels of stablecoin issuers and exchanges. Some crypto companies even face the risk of completely losing banking services, and the liquidity of stablecoins and the operation of exchanges are also threatened.
Related reading: A 10,000-word article analyzing de-banking: the triple game of compliance, risk and politics , The United States launches Operation Choke Point? Plans to marginalize the Crypto industry
FTX Collapse: The Fuse of High Regulatory Pressure
Operation Choke Point 2.0 is closely related to the collapse of the FTX exchange in November 2022. The collapse of FTX caused billions of dollars in customer funds to be lost, and market confidence fell to the bottom. The 2022 crypto credit crisis did not have much impact on traditional finance, but regulators obviously wanted to take precautions before it happened. Therefore, the regulatory system prevented risks from spreading to the banking system by restricting banks contact with the crypto industry.
Crypto-friendly banks naturally became the first targets of regulation. Silvergate and Signature were the few banks willing to provide services to crypto customers at the time, so they were under tremendous pressure. In December 2022, Senators Elizabeth Warren, John Kennedy, and Roger Marshall jointly wrote a letter to Silvergate, criticizing it for failing to detect suspicious activities by FTX and its affiliate Alameda Research.
Silvergate subsequently suffered a run due to the collapse of FTX, and its stock price plummeted from a high of $160 in March 2022 to $11.55 in January 2023. Signature announced that it would cut its crypto deposits from $23 billion to $10 billion and completely withdraw from the stablecoin business. Metropolitan Commercial, another bank serving crypto customers, also announced the closure of its crypto business in January 2023.
Bank regulation shifts under Trump
In 2025, with Trumps return to the White House, the US crypto regulatory environment has changed significantly. On March 7, the White House held its first cryptocurrency summit, and the Office of the Comptroller of the Currency (OCC) issued a series of explanatory documents, allowing national banks to provide services such as cryptocurrency custody, stablecoin reserves, and blockchain node participation without special approval. It overturned the restrictive guidance of the Biden administration that required banks to consult with regulators in advance, and abolished the 2021 Interpretation Letter No. 1179.
OCC Acting Comptroller Hood said: Digital assets should and must become part of the U.S. economy. The new policy allows banks to securely store private keys for customers, hold stablecoin reserves pegged 1:1 to the U.S. dollar, and serve as nodes to verify blockchain transactions, providing banks with flexibility to deeply integrate into the digital asset field.
The OCCs shift may be closely related to Trumps promise. Trump said at this years White House Cryptocurrency Summit: Some people have suffered a lot, and what they did was ridiculous... This will all end soon. He criticized Operation Choke Point 2.0 for forcing banks to close crypto business accounts and weaponizing the government against the entire industry.
On April 17, Powell further clarified the direction of regulatory relaxation in his speech at the Chicago Economic Club, believing that there is room for relaxation in the current cryptocurrency regulatory policy for banking institutions . He acknowledged the mainstream trend of cryptocurrency in recent years, pointing out that regulators had been cautious due to a series of bankruptcies and frauds, but the current market has undergone fundamental changes, and a clear regulatory framework needs to be established for stablecoins to send a signal of support for innovation.
Related reading: Fed Powell talks about cryptocurrency. What positive signals does it send to the industry?
Today, the Federal Reserve officially revoked the relevant guidance of Operation Choke Point 2.0. Banks do not need to report crypto business, and related activities are monitored through regular regulatory procedures. Consistent with the Trump administrations commitment to abolish the policy of excluding crypto companies from banking services, the investigation of the House Oversight Committee and the documents disclosed by the FDIC have also promoted policy transparency.
The next regulatory boon for the crypto market?
Since 2025, the crypto market has received good news one after another. After the SEC confirmed a number of copycat ETF applications, the return of traditional crypto market makers, the abolition of DeFi broker rules, the withdrawal of a series of crypto lawsuits, and Trump personally appointed the new pro-crypto chairman of the SEC, there is good news at the banking regulatory level. The Federal Reserve announced the withdrawal of Operation Choke Point 2.0, marking the end of the three-year high-pressure regulatory era for banks and crypto markets.
The most direct manifestation of the positive effect is that the threshold for banks to serve the crypto industry has been greatly lowered, legal risks have been greatly reduced, and more banks may provide account, payment and custody services to crypto companies. In addition, the legal currency channels for stablecoin issuers and exchanges will be smoother.
More importantly, the Trump administration has made crypto-friendly policies a priority, and Powells affirmation of the stablecoin regulatory framework has injected clear expectations into the market. These intensive positive signals may further attract more traditional financial institutions to enter the market, push up market liquidity, and boost investor confidence.
