Newly released documents expose the FDIC’s covert efforts to restrict banking services for crypto companies during the Biden era. Dubbed “Operation Choke Point 2.0,” this strategy reveals how regulatory pressure was used to debank the crypto industry, raising serious concerns about political bias in financial oversight.

What’s Inside the New FDIC Correspondence?

Unveiling the mechanics of regulatory pressure

On February 5, 2025, the FDIC released 175 documents detailing its interactions with banks regarding crypto-related activities. These documents, released ahead of a U.S. Senate Banking Committee GOP hearing, shed light on the controversial practice of pressuring financial institutions to suspend services to crypto companies—without clear legal grounds.

Dubbed the “pause letters,” the correspondence reveals how banks were instructed to halt operations for crypto clients, with the FDIC often ignoring follow-up queries for months. This deliberate stalling tactic, described as “regulation by exhaustion,” forced banks into compliance by wearing them down through bureaucratic inertia.

The documents also show that when banks tried to negotiate limited service agreements for crypto firms, the FDIC pushed for stricter restrictions, prioritizing broad bans over case-by-case assessments.

An Unexpected Ally in the Fight Against Debanking

Bipartisan outrage and surprising support from crypto critics

In a rare show of bipartisan agreement, both Democrats and Republicans condemned the FDIC’s actions during the Senate hearing. Even Senator Elizabeth Warren, known for her anti-crypto stance, voiced concerns over unfair debanking practices. She sent a letter to President Trump, offering to collaborate on reforming banking regulations to prevent politically motivated service denials.

While Warren’s letter avoids mentioning cryptocurrencies directly, it highlights that over half of the debanking complaints were linked to major institutions like Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup. Her involvement signals a potential shift in the political landscape surrounding crypto regulation.

The Fallout: How Banks Were Forced to Cut Off Crypto Clients

A battle banks couldn’t win

The FDIC’s internal communications reveal a systematic effort to isolate crypto firms from the banking system. Despite banks’ attempts to justify the safety and soundness of their crypto-related transactions, the FDIC remained firm, citing vague concerns about reputation risks, market volatility, and consumer protection.

Even when banks complied with FDIC directives, crypto clients were often left without viable banking alternatives, effectively debanking them from the financial ecosystem. The documents suggest that regulatory overreach, rather than financial risk, was the driving force behind these actions.

What’s Next for Crypto and the FDIC?

Regulatory reforms on the horizon

With a new pro-crypto leadership at the FDIC under Chairman Travis Hill, there’s a clear intention to reverse the anti-crypto policies of the past. Hill announced plans to reevaluate the FDIC’s supervisory approach to crypto-related activities, signaling the end of Operation Choke Point 2.0.

Key reforms include:

• Replacing Financial Institution Letter (FIL) 16-2022, which required banks to report all crypto-related activities for FDIC review.
• Collaborating with the President’s Working Group on Digital Asset Markets to create more balanced regulations.
• Focusing on safety and soundness without stifling innovation in the crypto space.

These changes suggest a more favorable environment for crypto companies, with the potential for restored banking access and reduced regulatory hostility.

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