House committee examines impact of Operation Choke Point 2.0 on crypto industry

The House Financial Services Committee is convening an Oversight and Investigations Subcommittee hearing to address concerns regarding the Biden Administration's Operation Choke Point 2.0. The hearing, led by Subcommittee Chairman Dan Meuser (PA-09), aims to investigate the alleged negative impacts of this operation on the digital assets ecosystem.

In his prepared opening remarks, Chairman Meuser stated, "Today’s hearing is entitled, 'Operation Choke Point 2.0: The Biden Administration’s effort to put Crypto in the Crosshairs.' I’d like to thank the witnesses for appearing before the Committee today to share their experience and expertise on this issue."

Meuser claims that "The Biden Administration’s Operation Choke Point 2.0 was carried out by the prudential regulators to target and debank the digital asset ecosystem." He further alleges that "The FDIC used offline conversations and threats of formal supervisory actions to pressure banks to deny service to digital asset firms, their employees, and even their customers."

He described these actions as a "serious abuse of regulatory power" and drew parallels with similar initiatives during Obama's presidency, stating that "Beginning in 2013, Obama’s Department of Justice enlisted bank regulators in the first iteration of Operation Choke Point."

Meuser criticized what he perceives as a repeat strategy under President Biden: "The Biden Administration broke out the same playbook. This time their target was the digital asset ecosystem." According to him, regulators have been using vague letters and threatening banks with penalties if they continue relationships with digital asset companies.

Acting FDIC Chairman Travis Hill reportedly revealed activities under Operation Choke Point 2.0 that led many banks to cease doing business with crypto firms due to perceived regulatory challenges.

Hill commented: "Requests from… banks were almost universally met with resistance... Both individually and collectively, these and other actions sent the message to banks that it would be extraordinarily difficult—if not impossible—to move forward."

Despite these issues, there is a commitment from FDIC leadership for corrective measures moving forward. Meuser emphasized ongoing oversight efforts: "I will continue to conduct oversight on their progress and determine legislative solutions."

He concluded by highlighting the importance of access to financial services for American businesses: "Access to capital and banking services are critical... Regulators have a duty... but not at the expense of legitimate businesses like energy and crypto companies."