Paul Grewal, Coinbase’s chief legal officer, said he would testify before Congress regarding Operation Choke Point 2.0 during a hearing scheduled for February 6, 2025.
The hearing is part of Congress’s plans to investigate allegations that federal regulators pressured banks to avoid doing business with crypto companies.
The hearing, conducted by the Financial Services Committee of the U.S. House of Representatives will look at how regulatory actions have affected cryptocurrency firms and their access to banking services.
I’m testifying at the @FinancialCmte’s oversight hearing looking into the past clandestine and undemocratic campaign to cut off crypto from banking. On behalf of @Coinbase, I’m proud to help shed light on the unfair treatment of our industry and thank @FinancialCmte and… pic.twitter.com/TDIVu1cdW1
— paulgrewal.eth (@iampaulgrewal) February 3, 2025
Better For Crypto?
Operation Choke Point 2.0 is purportedly a regulatory initiative led by U.S. officials under President Biden that aims to curtail banking access for crypto companies. It is widely regarded as a follow-up to the original Operation Choke Point, which utilized regulatory pressure to force banks to discontinue services for certain high-risk businesses.
Critics argue that federal regulators, including the Federal Deposit Insurance Corporation (FDIC), have been exerting pressure on banks to limit or cease their relationships with crypto firms. Many legitimate businesses are allegedly being “de-banked” due to their involvement in the cryptocurrency sector.
Industry insiders have been sounding the alarm about the issue for years. Coinbase, among the most vocal, has alleged that there has been a hidden and unfair effort to prevent cryptocurrency companies from accessing traditional banking services.
The exchange has recently revealed some documents, including “pause letters” from the FDIC, that appear to confirm a coordinated campaign to block crypto from the banking system.
Caitlin Long, CEO of Custodia Bank, has accused regulators, including Senator Elizabeth Warren, of circumventing the rule of law to target the crypto sector. She noted that regulatory actions to limit access to essential financial services for the industry came shortly after the collapse of FTX.
Marc Andreessen, co-founder of the venture capital firm Andreessen Horowitz (a16z), pointed out during his appearance on “The Joe Rogan Experience” that over 30 tech founders have faced debanking due to Operation Choke Point 2.0.
Both Long and Andreessen said that these regulatory actions are not only harmful to individual businesses but also detrimental to innovation and competition in the tech and crypto sectors.
With the change in the U.S. presidential administration, there is renewed optimism that Operation Choke Point 2.0 will be abolished. Trump has vowed to end this initiative. In fact, he had previously terminated the original Choke Point initiative from the Obama era.
The House Oversight Committee has requested information from the Blockchain Association and other crypto companies regarding Operation Choke Point 2.0 and the debanking of lawful companies and individuals.
Congress Actively Probes Allegations of Systematic Debanking
The House Oversight Committee, led by Chairman James Comer who has opposed SEC Chair Gary Gensler’s regulatory approach, has initiated an investigation into claims that U.S. banks have been de-banking individuals and entities in the crypto sector based on political affiliations or industry involvement.
Many cryptocurrency businesses confirmed earlier that they had received letters from the House Oversight Committee asking for information on Operation Choke Point 2.0. The inquiry is part of an investigation into the alleged debanking of cryptocurrency firms under the Biden administration.
The Senate Banking Committee reportedly reached out to the Blockchain Association, Coinbase CEO Brian Armstrong, and Uniswap Labs CEO Hayden Adams, among several others, requesting their testimonies about their experiences with debanking. The Committee aims to gather firsthand accounts to understand the extent and implications of these practices.
Senator Cynthia Lummis has been outspoken against Operation Choke Point 2.0, which she believes systematically restricts banking access for cryptocurrency businesses.
As the chair of the newly formed Senate Banking Subcommittee on Digital Assets, Lummis aims to establish a comprehensive legal framework for digital assets that focuses on both innovation and consumer protection. Her influence could protect the crypto industry from unfair regulatory actions like Operation Choke Point 2.0.
The ongoing investigation could lead to changes in how banks interact with cryptocurrency firms and may prompt discussions around regulatory reforms aimed at protecting these businesses from discriminatory practices.
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