The U.S. government has deliberately tried to curb crypto development for years, according to a report released by U.S. Rep. French Hill, who has been at the center of Congress’ efforts to establish crypto policies.
The Republican chairman of the House Financial Services Committee released a lengthy report Monday detailing federal government activities that he said represent a campaign to crack down on digital asset activity in the United States under the Biden administration. As the Senate still attempts to hammer out the next big step in crypto legislation, Hill seeks to cement the narrative that a hostile U.S. government spearheaded what the industry and its Republican allies have called “Operation Choke Point 2.0.”
The first “Choke Point” was a government task force intended to warn banks about legal sectors that regulators – including the Federal Deposit Insurance Corp. – considered particularly risky, such as payday lenders and ATM operators. A backlash against the controversial policy has led some Republican appointed regulators, particularly focused on the gun industry, to insist that banks be required to handle all legal activities.
With this crypto-focused iteration, Hill’s report looked at the financial industry’s systemic “debanking” of digital asset companies and their executives. “The Biden administration has sought to make it nearly impossible to engage in activities related to digital assets,” the report said. “To do this, he used a regulatory regime that provided too little certainty to financial institutions and gave too much discretion to the regulators who oversee them.”
None of the report’s findings surprise those who have followed U.S. crypto oversight in recent years. It highlights the Securities and Exchange Commission’s now-abandoned preference for shaping its digital asset policies with enforcement cases, and it examines the constraints that banking agencies such as the Federal Reserve impose on regulated banks engaging in digital asset activities.
The paper argues that Biden-era regulators have also failed to establish a clear regulatory regime for cryptocurrency and have warned bankers about it, “characterizing the digital asset ecosystem as an industry prone to market volatility and risks.” fell from around $34,000 to around $94,000, but it also fell below $17,000 at the end of 2022. Some banks closely associated with the sector also went bankrupt in 2023.
This year, BTC reached an all-time high above $126,000 before falling rapidly in recent weeks to around $84,000 earlier this week.
However, one of the industry’s greatest strengths is its relationships with President Donald Trump’s White House and Congress. Earlier this year, lawmakers passed a bill to regulate US stablecoin issuers – the first major crypto legislation to become law. And the House of Representatives also approved a bill that would oversee broader digital asset markets, although the Senate is still working to catch up.
“Importantly, financial regulators in the Trump administration have rescinded many Biden-era guidance, supervisory and regulatory letters, interpretive letters, and rules that favored the debanking of the digital asset ecosystem by some regulators,” the report notes.
