The U.S. government was deliberately trying to hold back crypto development for years, according to a report released by U.S. Representative French Hill, who has been at the center of Congress’ push toward establishing crypto policies.
The Republican chairman of the House Financial Services Committee issued a lengthy report on Monday detailing the federal government activities he contends represent a campaign to quell digital assets activity in the U.S. during the Biden administration. While the Senate still tries to work out the next big step in crypto legislation, Hill is seeking to cement the narrative that an unfriendly U.S. government ran 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 caution banks about legal industries that regulators — including the Federal Deposit Insurance Corp. — considered especially risky, such as payday lenders and ATM operators. A backlash against the controversial policy led some Republican regulatory appointees, especially focused on the firearms industry, to insist that banks be compelled to handle any legal businesses.
With this crypto-focused iteration, Hill’s report looked at the financial sector’s systemic “debanking” of digital assets firms and their executives. “The Biden administration sought to make it nearly impossible to engage in digital asset related activities,” the report said. “To do so, it utilized a regulatory regime that provided too little certainty to financial institutions and gave too much discretion to the regulators that oversee them.”
None of the report’s conclusions come as a surprise to those who’ve followed U.S. crypto oversight in recent years. It highlights the Securities and Exchange Commission’s now-abandoned preference to shape its digital assets policies with enforcement cases, and it reviews the constraints that banking agencies such as the Federal Reserve put on regulated banks engaging in digital assets activity.
The document argued that Biden-era regulators also failed to establish a clear regulatory regime for cryptocurrency and warned bankers about it, “characterizing the digital asset ecosystem as an industry prone to market volatility and risk.”In that time period — especially in 2022 — the industry saw massive high-profile firm collapses and fraud cases, and during President Joe Biden’s four-year term, the leading asset, bitcoin , rose from about $34,000 to about $94,000, but it had also dropped below $17,000 in late 2022. Some banks closely associated with the industry also failed in 2023.
This year, BTC reached a record high above $126,000 before dropping rapidly in recent weeks to about $84,000 at the start of this week.
However, one major strength of the sector is in its relationships with President Donald Trump’s White House and with Congress. Earlier this year, lawmakers passed a bill to regulate U.S. stablecoin issuers — the first major crypto legislation to become law. And the House of Representatives also approved a bill that would oversee the wider digital assets markets, though the Senate is still working to catch up.
“Importantly, Trump administration financial regulators have rescinded numerous Biden-era guidance, supervision and regulation letters, interpretive letters, and rules that fostered the debanking of the digital asset ecosystem by certain regulators,” the report noted.
