Republican Report Accuses Regulators of Orchestrating 'Operation Choke Point 2.0' Against Crypto

A comprehensive congressional investigation alleges a coordinated campaign by federal banking regulators to sever the digital asset industry from the U.S. financial system, prompting calls for urgent legislative clarity.

Introduction: The Allegation of Systemic Debanking

In a significant escalation of the political battle over cryptocurrency regulation, Republican lawmakers have released a damning final report accusing key financial regulators under the Biden administration of orchestrating a covert campaign to debank digital asset companies. Dubbed “Operation Choke Point 2.0,” the report from the House Financial Services Committee and the House Oversight Subcommittee claims that agencies including the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Securities and Exchange Commission (SEC) used informal pressure and regulatory ambiguity to systematically cut off legitimate crypto businesses from banking services.

The report, spearheaded by House Financial Services Chair French Hill and Oversight Subcommittee Chair Dan Meuser, concludes that this alleged campaign targeted “at least 30 entities and individuals” and created a climate of fear among banks. With the Digital Asset Market Structure bill pending in the Senate and a new administration taking a different tack, this report sets the stage for a pivotal conflict over the future of crypto in America, underscoring the urgent need for clear legislative rules over regulatory discretion.

Unpacking 'Operation Choke Point 2.0': A Modern Allegation with Historical Echoes

The Ghost of Operation Choke Point

To understand the weight of the “2.0” label, one must recall the original Operation Choke Point. This was a controversial initiative launched by the U.S. Department of Justice during the Obama administration, ostensibly aimed at fighting fraud by discouraging banks from providing services to high-risk industries, such as payday lenders and firearm dealers. Critics argued it overreached, effectively blacklisting legal businesses through back-channel pressure on their financial partners without due process.

The Republican report draws a direct parallel, alleging that under President Joe Biden, financial regulators adopted similar tactics—using “vague rules, excessive discretion, informal guidance, and aggressive enforcement actions”—to pressure banks into severing ties with the digital asset sector. This comparison is politically charged, framing the regulators’ actions not as prudent risk management but as a politically motivated offensive against an emerging industry.

The Core Allegations: Pressure, Pauses, and Red Tape

The report details specific mechanisms allegedly employed by regulators. It claims the FDIC sent “pause letters” to financial institutions, encouraging them to halt relationships with crypto clients. Simultaneously, it accuses the OCC of creating “additional red tape for digital asset-related activities,” complicating compliance to a degree that made servicing crypto firms untenable for many banks. Furthermore, the SEC is cited for its “regulation by enforcement tactics,” creating legal uncertainty that made banks wary of engaging with any crypto-related entity for fear of secondary liability.

This alleged multi-agency approach created what the report describes as a chilling effect, where banks preemptively terminated accounts or refused to onboard new crypto clients to avoid regulatory scrutiny, regardless of the individual company’s compliance posture.

The Human and Business Impact: Documented Cases of Debanking

A Pattern of Severed Services

Beyond theoretical allegations, the report points to tangible outcomes: “at least 30 entities and individuals engaging in digital asset-related activities” were debanked in some fashion. While the report does not list all 30 cases publicly, the phenomenon has been widely reported within the crypto industry. Companies ranging from small blockchain startups to larger entities have shared notices from banks abruptly closing business accounts, often with limited explanation beyond citing “risk appetite” or changing policies.

This debanking extends beyond companies to individuals. The report notes that many private citizens who hold digital assets have received similar letters from their financial institutions, effectively penalizing them for personal investment choices in a legal asset class. This creates significant practical hurdles, as operating without access to basic banking services like checking accounts, wire transfers, and payroll systems is nearly impossible for any modern business.

The Ripple Effect on Innovation and Competition

The consequence of this alleged campaign, as framed by the report, is a stifling of American innovation. By creating an inhospitable banking environment, regulators pushed entrepreneurship and technological development in blockchain and digital assets offshore to jurisdictions with clearer rules. The report implies this not only harms economic growth but also cedes U.S. leadership in a critical technological field, potentially allowing other nations to set the global standards for the digital financial system.

The Legislative Counterattack: The CLARITY Act and Market Structure Bills

Congress’s Prescribed Solution

In response to these findings, Chairmen Hill and Meuser are unequivocal: “Congress must enact digital asset market structure legislation.” Their primary vehicle is the CLARITY Act (Clarity for Payment Stablecoins Act). The report argues this bill is essential to prevent a future “Operation Choke Point 3.0” by establishing clear statutory rules that replace regulatory ambiguity and enforcement-driven policy.

The CLARITY Act aims to achieve several key goals:

1. Reverse Regulation by Enforcement: It seeks to curtail the SEC’s ability to define securities through lawsuits rather than rulemaking.
2. Establish Clear Rules: It would provide definitive guidelines for how digital assets are classified and regulated.
3. Explicitly Permit Banking Engagement: The bill would make it unequivocally clear that banks are allowed to serve digital asset clients who comply with the law.

The Path Forward in Congress

Legislative action is already in motion but faces a complex path. The broader Digital Asset Market Structure bill was passed by the House of Representatives in July 2024. It now resides with two key Senate committees: the Republican-led Senate Agriculture Committee and the Senate Banking Committee, each having released their own draft versions. Senate Banking Chair Tim Scott has indicated a goal to have reconciled legislation ready for signing into law by early 2026.

This timeline highlights that while the political winds may have shifted with a new administration, permanent change requires bipartisan congressional action—a process measured in years, not months.

The Regulatory Pendulum Swings: A New Administration's Approach

A Shift in Tone and Policy

The political context of this report is crucial. Since taking office in January 2025, President Donald Trump’s administration has acted swiftly to alter the regulatory landscape described in the report. Through executive orders targeting debanking practices and by appointing new officials to lead agencies like the Federal Reserve, FDIC, OCC, and SEC, the administration has signaled a deliberate shift away from the perceived hostility of the prior era.

The report positions itself as both an indictment of past actions and a warning for future administrations. Its findings are intended to build a documented case for why legislated rules are superior to regulatory discretion that can change dramatically with each election cycle. This underscores a central tension in U.S. crypto policy: should it be shaped by agile but potentially volatile regulators, or by slower but more stable laws from Congress?

Conclusion: A Defining Moment for Crypto’s Legal Foundation

The release of this Republican report marks a defining moment in the ongoing struggle to integrate digital assets into the U.S. financial system. It crystallizes long-held industry grievances into formal congressional allegations of systemic overreach, framing debanking not as isolated business decisions but as a coordinated regulatory strategy.

For crypto professionals and enthusiasts, this development signals two concurrent realities:

1. Immediate Regulatory Relief: The change in administration has already begun altering day-to-day regulatory pressures on banks servicing crypto clients.
2. Long-Term Uncertainty: Without concrete legislation like the CLARITY Act or a Digital Asset Market Structure law, this relief remains temporary and subject to reversal after future elections.

The call for legislative clarity is now louder than ever. The promised timeline for Senate action extending into 2026 means vigilance is required. Stakeholders should monitor key developments: markups of bills in Senator Tim Scott’s Banking Committee and Senator Boozman’s Agriculture Committee, potential bipartisan compromises on issues like stablecoin oversight versus broader market structure, and any interim guidance issued by newly appointed agency heads.

Ultimately, this report reinforces that sustainable growth for cryptocurrency in America hinges on transitioning from a state of regulatory ambiguity—where rules are inferred from enforcement actions—to one of legislative certainty. The journey toward that clarity will be one of the most significant stories shaping the global digital asset landscape over the coming years