An investigation in the US House of Representatives and a hearing in the Senate will examine whether financial regulators during former President Joe Biden’s administration deliberately isolated crypto industry leaders and others in the banking system in an inappropriate use of their authority.
“Disposal is un-American: All legal businesses deserve to be treated the same regardless of their political beliefs,” said Senate Banking Committee Chairman Tim Scott, a South Carolina Republican who took office earlier this year. month and scheduled a hearing for February 5. on debanking “Unfortunately, under Operation Chokepoint 2.0, Biden’s regulators abused their power and forced financial institutions to cut services to digital asset companies, political figures, and conservative-aligned companies and individuals.”
Operation Chokepoint 2.0 is the name Republican lawmakers and the digital asset industry have been using for the systemic separation of crypto insiders from US banks, referring to Operation Chokepoint of an earlier era, a government-sanctioned effort to reduce risk in banking by encouraging lenders. stay away from legal but otherwise risky businesses.
Delving deeper into the struggle of cryptocurrency executives and companies to maintain banking relationships, the House Oversight Committee is “investigating whether this debanking practice originates from the financial institutions themselves or from implicit or explicit pressure from the government regulators,” according to a letter from the committee chair. , sent Rep. James Comer on Friday to the founders and CEOs of several crypto companies and organizations, including Coinbase, Lightswap, and Uniswap Labs.
The challenge with blaming the lack of banking options entirely on the government is that some financial institutions may have made decisions based on their own risk appetites or business plans that deliberately stayed away from crypto interests. And banking regulators, such as the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, were public in their guidance that regulated banks attempting to do crypto business would face restrictions and additional scrutiny from the agencies.
However, a Coinbase search of private FDIC communications with banks showed that the agency ordered them to stop pursuing digital asset services until the regulator had specific rules in place, which it was not developing.
“We are grateful to assist in the thorough investigation of this pernicious practice,” said Kristin Smith, executive director of the Blockchain Association, which also received the letter from the House committee investigating the trend.
Meanwhile, congressional Democrats have been focusing their own investigative requests on President Donald Trump’s recently launched meme coin, $TRUMP. He has been accused of using the presidency to amass billions of dollars, citing the token as a potential risk for dangerous conflicts of interest.
The House Financial Services Committee announced a hearing on the issue Friday night, scheduled for Thursday, February 6.
UPDATE (January 24, 2024, 21:25 UTC): Adds hearing in the House.
