Bank Regulators’ Stealth Attack on Crypto Industry

A recent white paper by the Washington D.C.-based law firm Cooper & Kirk reveals that federal banking regulators—including the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, and the Office of the Comptroller of the Currency (OCC)—appear to be engaging in a covert financial battle against the cryptocurrency sector. The report indicates that these regulators are employing similar regulatory instruments and pressure tactics as those utilized during the infamous “Operation Choke Point” under the Obama administration, which sought to restrict access to financial services for payday lenders, firearms and tobacco merchants, and other politically undesirable businesses.

As with Operation Choke Point, the banking authorities have released unofficial guidance documents suggesting that cryptocurrency clients pose a heightened risk to banks. As a result, companies in the crypto sector are experiencing sudden debanking and loss of access to the ACH network without explanation. In recent weeks, federal regulators have effectively closed a bank known to serve the crypto industry, opting to shut down rather than sell the portion of the bank catering to digital asset customers, at a cost of billions of dollars.

Having successfully sued the FDIC, Federal Reserve, and OCC over the original Operation Choke Point, Cooper & Kirk is well-equipped to identify signs of the reemergence of such pressure tactics, now targeting the crypto industry. David H. Thompson, an attorney at Cooper & Kirk who participated in the initial litigation against Operation Choke Point and lead author of the white paper, expressed concern that the regulatory tools previously used against politically unpopular industries are being employed against crypto. He called on Congress to intervene and put an end to this “Operation Choke Point 2.0” just as it did with the first iteration.