The US government deliberately tried to slow the development of cryptocurrencies for years, according to a report published by US Representative French Hill, who has been at the center of Congress’ push to establish cryptocurrency policies.
The Republican chairman of the House Financial Services Committee issued a lengthy report Monday detailing federal government activities that he says amount to a campaign to stifle digital asset activity in the U.S. during the Biden administration. While the Senate is still trying to craft the next big step in cryptocurrency legislation, Hill is seeking to cement the narrative that a hostile US government directed what the industry and its Republican allies have called “Operation Choke Point 2.0.”
The original “Choke Point” was a government task force meant to warn banks about legal industries that regulators – including the Federal Deposit Insurance Corporation – considered especially risky, such as payday lenders and ATM operators. A backlash against the controversial policy led some Republican-appointed regulators, especially focused on the firearms industry, to insist that banks be forced to handle any legal business.
With this iteration focused on cryptocurrencies, Hill’s report analyzed the systemic “debanking” of digital asset companies and their executives by the financial sector. “The Biden administration sought to make it nearly impossible to engage in activities related to digital assets,” the report says. “To do so, it used a regulatory regime that provided too little certainty to financial institutions and too much discretion to the regulators who oversee them.”
None of the report’s conclusions are surprising to those who have followed cryptocurrency oversight in the United States in recent years. It highlights the Securities and Exchange Commission’s now-abandoned preference to shape its digital asset policies with enforcement cases, and reviews the limitations that banking agencies like the Federal Reserve impose on regulated banks engaging in digital asset activities.
The document argued that Biden-era regulators also failed to establish a clear regulatory regime for cryptocurrencies and warned bankers about it, “characterizing the digital asset ecosystem as an industry prone to market volatility and risk.” In that period, especially in 2022, the industry saw massive high-profile company collapses and fraud cases, and during President Joe Biden’s four-year term, the main asset, bitcoin It rose from about $34,000 to about $94,000, but had also fallen below $17,000 by the end of 2022. Some banks closely associated with the industry also failed 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 sector’s main 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 passed a bill that would oversee broader digital asset markets, although the Senate is still working to catch up.
“Importantly, financial regulators under the Trump administration have rescinded numerous Biden-era guidance, supervisory and regulatory letters, interpretive letters and rules that encouraged debanking of the digital asset ecosystem by certain regulators,” the report notes.
