A U.S. House investigation and Senate hearing will examine whether financial regulators during former President Joe Biden’s administration deliberately cut off crypto industry executives and others from the banking system in an inappropriate use of authority.
“Debanking is un-American — all legal activity deserves to be treated equally regardless of political beliefs,” said Senate Banking Committee Chairman Tim Scott, a South Carolina Republican who took over gavel earlier this month and scheduled a Feb. 5 hearing on the removal.
Operation Chokepoint 2.0 is the name Republican lawmakers and the digital asset industry are using for the systemic disruption of crypto insiders from U.S. banks, in reference to the Operation Chokepoint of an earlier era – an effort sanctioned by the government to reduce risk in banking by encouraging lenders of an era to move away from legal but otherwise risky businesses.
Pushing into crypto executives’ and companies’ fight to maintain banking relationships, the House Oversight Committee is “investigating whether this unbanning practice comes from financial institutions themselves or from implicit or explicit pressure from government regulators “, according to a letter committee chairman Rep. James Comer sent Friday to the founders and CEOs of several crypto companies and organizations, including Coinbase, LightSwap, and UniSwap Labs.
The challenge of denying the lack of banking options entirely on government is that some financial institutions may have made decisions based on their own risk appetites or business plans that deliberately avoided crypto interests. And banking regulators such as the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency were public in their guidance that regulated banks seeking to do crypto business will face restrictions and additional agency scrutiny.
However, a Coinbase lawsuit of the FDIC’s private communications with banks showed that the agency ordered them to stop pursuing digital asset services until the regulator had specific rules in place, which She wasn’t developing.
“We are grateful to assist in a thorough investigation into this pernicious practice,” said Kristin Smith, CEO of the Blockchain Association, which also received the letter from the House committee probing the trend.
Meanwhile, congressional Democrats have focused their own demands for an investigation into President Donald Trump’s recently launched Meme Coin, $Trump. He has been accused of using the presidency to accumulate billions of dollars, and they cite the token as a potential risk for dangerous conflicts of interest.
The House Financial Services Committee announced a hearing on the matter Friday evening, scheduled for Thursday, February 6.
Update (January 24, 2024, 9:25 p.m. UTC): Adds a house audition.
