While the Biden administration publicly champions innovation, its Federal Deposit Insurance Corporation has quietly waged a behind-the-scenes campaign against crypto banking. Recently released documents—175 of them—tell a damning story. The FDIC systematically sent “pause” letters to 24 financial institutions, effectively shutting down their crypto aspirations.
Banks weren’t just discouraged. They were stonewalled. Requests related to blockchain or digital assets were “almost universally met with resistance.” Multi-month silences. Directives to halt crypto activities. No wonder most banks threw in the towel.
House Oversight Committee Chairman James Comer isn’t having it. The Kentucky Republican launched an investigation into what critics dub “Operation Choke Point 2.0″—an alleged coordinated effort to cut crypto off from the financial system. Sounds dramatic, right? Except federal regulators really did create a hostile environment. The investigation was formally announced on February 28 to examine potential political motives behind the regulatory delays.
Even Federal Reserve Chair Powell admits some debanking claims are legitimate. When the Fed Chair acknowledges a problem, you know it’s real.
When the Fed Chair admits there’s a debanking problem, the crypto industry’s complaints can’t be dismissed as paranoia.
Crypto companies felt the squeeze firsthand. Coinbase got so frustrated they filed a FOIA lawsuit just to see what the FDIC was hiding. This regulatory hostility has particularly affected the decentralized finance ecosystem, which operates without traditional banks or brokers using smart contracts. Anchorage Digital Bank’s CEO testified that debanking wasn’t isolated—it was widespread. The timing of the document release coincided with Senate Banking Committee hearings on alleged debanking practices.
The regulatory winds may be shifting, though. Travis Hill, appointed FDIC Acting Chairman in January 2025, ordered a thorough review of crypto supervision. He’s promised transparency beyond typical FOIA requirements. Imagine that—a regulator who believes in transparency!
Hill plans to replace the restrictive Financial Institution Letter 16-2022 and create actual pathways for safe crypto banking. The goal? Balance economic innovation with sound banking principles.
For an industry built on decentralization, crypto sure has been at the mercy of centralized authorities. The FDIC documents expose how regulators can effectively kill innovation without passing a single law. Just send some letters, create uncertainty, and watch the market respond. Mission accomplished.
