House GOP Report Accuses U.S. Regulators of Orchestrating 'Operation Choke Point 2.0' Against Crypto
A damning congressional report alleges a coordinated, multi-agency campaign during the Biden administration to debank the digital asset industry, drawing direct parallels to a controversial Obama-era program.
Introduction: The Allegation of a Coordinated Crackdown
On December 1, 2025, U.S. Representative French Hill, the Republican chairman of the powerful House Financial Services Committee, released a formal report leveling a severe accusation against federal financial regulators. The document contends that during the Biden administration, agencies including the Securities and Exchange Commission (SEC) and federal banking regulators orchestrated a deliberate campaign to stifle cryptocurrency activity in the United States. This campaign, which the industry and its political allies have dubbed "Operation Choke Point 2.0," is portrayed as a systemic effort to cut off digital asset firms from the traditional banking system—a move with potentially existential consequences for the sector.
The report seeks to cement a narrative that has simmered within crypto circles for years: that an unfriendly regulatory environment was not merely a byproduct of caution but a targeted strategy. As the Senate continues its slower pace on comprehensive crypto legislation, this report from the House GOP majority aims to define the recent past and influence future policy. It arrives at a pivotal moment, following the passage of the first major U.S. stablecoin law and amid a shifting political landscape that has seen the Trump administration roll back several Biden-era regulatory guidances.
The Genesis: What Was "Operation Choke Point 1.0"?
To understand the weight of the "2.0" accusation, one must revisit the original "Operation Choke Point." This was not a piece of legislation but a controversial interagency task force initiated during the Obama administration. Its stated goal was to caution banks about serving clients in legal industries that regulators—including the Federal Deposit Insurance Corp. (FDIC)—considered to pose elevated "reputation risk" or higher probabilities of fraud and money laundering.
The targeted sectors included payday lenders, ammunition sales, tobacco retailers, and ATM operators. Regulators issued guidance and used supervisory pressure, leading many banks to sever relationships with entire categories of legal businesses. The program faced intense backlash, particularly from Republican lawmakers and industries like firearms, who argued it amounted to backdoor prohibition through financial exclusion. This backlash eventually led some Republican-appointed regulators to push for rules compelling banks to serve any legal business.
The new House GOP report draws a direct parallel, arguing that digital asset firms became the target of a similar, updated playbook under the Biden administration—hence the "Operation Choke Point 2.0" moniker.
The Core Accusation: Systemic "Debanking" of Crypto
The central thesis of Chairman Hill's report is that regulators created an environment where traditional financial institutions felt compelled to avoid the digital asset sector entirely. "The Biden administration sought to make it nearly impossible to engage in digital asset related activities," the report states. "To do so, it utilized a regulatory regime that provided too little certainty to financial institutions and gave too much discretion to the regulators that oversee them."
This alleged "debanking" took multiple forms. Banking agencies like the Federal Reserve are cited for placing constraints on regulated banks wishing to engage with crypto clients or activities. The report argues that instead of establishing clear rules of the road, regulators broadly warned bankers about the digital asset ecosystem, "characterizing it as an industry prone to market volatility and risk." This characterization, while not unfounded given events like the collapses of FTX and Terra/Luna in 2022, is presented in the report as part of a deliberate strategy to discourage banking relationships rather than foster safe participation.
The practical effect, according to the report's narrative, was to push legitimate U.S. crypto innovation and businesses offshore or into less regulated corners of finance, harming American competitiveness.
The SEC's "Regulation by Enforcement" Under Scrutiny
A significant portion of the report focuses on the role of the Securities and Exchange Commission. It highlights what it describes as the SEC's "now-abandoned preference to shape its digital assets policies with enforcement cases." Under Chair Gary Gensler during the Biden administration, the SEC pursued an aggressive litigation strategy against numerous crypto firms and exchanges, alleging they were offering unregistered securities.
The report frames this approach not as necessary consumer protection but as a tactic within the broader "Choke Point 2.0" campaign. The argument is that by keeping the regulatory status of major tokens and services ambiguous while simultaneously launching high-profile enforcement actions, the SEC created profound uncertainty for both crypto companies and their potential banking partners. This uncertainty, the report suggests, was a key tool in discouraging traditional finance from engaging with the sector.
Contextualizing Regulatory Caution: Market Volatility and Failures
While presenting regulators' actions as a coordinated attack, the report does acknowledge the turbulent context in which these decisions were made. It notes that during President Joe Biden's term, "the industry saw massive high-profile firm collapses and fraud cases." The period referenced—especially 2022—was indeed marked by catastrophic failures like those of FTX, Celsius Network, and Voyager Digital, which eroded hundreds of billions in market value and consumer funds.
Furthermore, the report references bank failures in 2023 tied closely to the crypto industry, such as Silicon Valley Bank and Signature Bank, which were pivotal banking partners for many crypto firms. These events provided tangible reasons for banking regulators to express concern about concentration risks and volatility spillovers.
The price action of bitcoin itself during this period illustrates extreme volatility: while it rose from about $34,000 at Biden's inauguration to about $94,000 at the end of his term, it also plunged below $17,000 in late 2022 following the market contagion. In 2025 alone, BTC reached a record high above $126,000 before dropping rapidly in recent weeks to about $84,000 at the start of this week.
The Political Shift: Rescissions and Legislative Progress
A key section of the report details what it sees as corrective actions taken following the 2024 presidential election. "Importantly, Trump administration financial regulators have rescinded numerous Biden-era guidance, supervision and regulation letters, interpretive letters, and rules that fostered the debanking of the digital asset ecosystem by certain regulators," it notes.
This shift at the agency level has been accompanied by legislative momentum in Congress. Earlier this year (2025), lawmakers passed a bill to regulate U.S. stablecoin issuers—the first major piece of crypto-specific legislation to become law. Additionally, the House of Representatives approved a more comprehensive bill aimed at establishing oversight for wider digital assets markets. However, as highlighted in Hill's own summary accompanying his report's release, "the Senate is still working to catch up," leaving a fragmented regulatory landscape where House action contrasts with Senate deliberation.
Broader Implications: Competitiveness and Financial Inclusion
Beyond immediate political accusations, Hill's report touches on larger themes concerning U.S. financial leadership and innovation. The argument posits that "Operation Choke Point 2.0" did more than just burden domestic companies; it actively ceded technological ground and market influence to jurisdictions abroad with clearer crypto frameworks.
This debate intersects with ongoing discussions about financial inclusion and consumer protection—two areas often cited by both supporters and critics of stringent crypto regulation. Proponents of strict oversight argue it is necessary to prevent fraud and protect retail investors from a volatile asset class; critics counter that overzealous regulation stifles innovation that could improve payment systems and access to capital.
Conclusion: A Defining Narrative for Crypto's Political Future
The House GOP report on "Operation Choke Point 2.0" is less a revelation of new facts than a powerful consolidation of existing industry grievances into an official congressional narrative. It provides a structured political argument that frames recent regulatory history as a deliberate campaign rather than a series of disjointed or reactive measures.
For professionals and participants in the cryptocurrency space, this document serves several purposes:
- Historical Record: It codifies a specific interpretation of regulatory actions from 2021-2024.
- Political Tool: It arms legislative allies with a detailed critique as they craft new laws.
- Market Signal: It underscores that regulatory risk remains deeply intertwined with U.S. electoral politics.
What to Watch Next:
- Senate Action: The primary legislative bottleneck remains in Senate negotiations over market structure legislation.
- Agency Implementation: How Trump-appointed regulators at bodies like SEC continue to unwind previous guidance will be critical.
- Legal Challenges: Ongoing court cases challenging SEC authority may further reshape what is possible under existing law.
- Banking Sector Response: Whether traditional financial institutions increase their crypto engagement amid perceived regulatory thaw will test whether "debanking" pressures truly subside.
Ultimately, whether one views this period as necessary consumer protection or punitive overreach depends largely on perspective towards cryptocurrency itself—a divide reflected perfectly in today’s polarized political environment where digital asset policy has become another front in broader ideological battles over regulation versus innovation