Key Insights:
- In the latest crypto news, the Fed opened a 60-day public comment period on a proposal tied to ending crypto debanking.
- Supporters say the move could help end what the industry calls Operation Chokepoint 2.0. The proposal would shift supervision away from reputation risk and toward material financial risks.
- Senator Cynthia Lummis praised the step as overdue, and other crypto voices said it may mark a turning point
As per the latest crypto news, the Federal Reserve has taken a major step toward ending crypto debanking. It opened a two-month public comment period for a proposed rule on bank supervision, moving the plan from talk to formal review.
As a result, the policy shift now looks more serious than before. Crypto supporters say this is the clearest signal yet that Washington may finally shut the door on what they describe as Operation Chokepoint 2.0.
In a crypto news press release on Monday, the Federal Reserve said it was inviting public feedback on the proposal as it moves to turn it into law.
To support that process, the Fed set a 60-day window for comments. During that period, stakeholders can submit their views before the proposal moves to the next stage.
The Fed began this policy shift in June last year. At the time, it said it had instructed bank supervisors to stop pressuring banks to drop clients due to reputational risk concerns.
Instead, the central bank said banks should make those decisions on financial risk management. In other words, the focus should stay on measurable risk, not image or public perception.
The Federal Reserve’s latest move follows an announcement made last year. At the time, the Fed said the term would no longer guide bank supervision. Instead, it said supervisors should focus on material financial risks.
That change mattered because it shifted the standard banks use when reviewing customers. In short, the Fed signaled that decisions should rest on real financial exposure, not vague reputational concerns.
The Challenges That Faced Debanking
Vice Chair Michelle Bowman said the Fed had heard troubling reports of debanking. She said some supervisors had used concerns about reputation risk to pressure financial institutions to cut off customers for political views, religious beliefs, or involvement in lawful but unpopular businesses.
One case often cited in this crypto news debate involved JPMorgan and members of the Trump family. Critics described the account closures as debanking and pointed to the episode as a high-profile example of the broader concern.
After that, the President reportedly filed a lawsuit against the bank seeking $5 million in damages. His side described the bank’s action as political. The cryptoverse coined the term Operation Chokepoint 2.0 to describe this situation. In their view, it captured a broader campaign against the industry.
They argued that the Biden administration and parts of the banking sector worked in step to cut crypto firms off from traditional banking services. As a result, many in the industry saw it as a deliberate effort to squeeze legal businesses out of the financial system.
The current United States regime has taken steps to address crypto debanking, and the Federal Reserve’s recent actions reflect that push.
Earlier on, Trump reportedly worked on a draft order in August that would have asked bank regulators to investigate debanking complaints from the crypto industry. In effect, the move aimed to force a closer review of how banks were treating lawful crypto businesses.
Senator Lummis Supports Fed Steps to Address Crypto Debanking
In a crypto news post on X on Monday, Senator Cynthia Lummis welcomed the move and said the proposal was long overdue.
She argued that the Federal Reserve should not act as both judge and jury for digital asset banking companies. She also said she was pleased to see what she described as an important step toward permanently removing reputation risk from Fed policy and bringing Operation Chokepoint 2.0 to an end.
Beyond the Federal Reserve’s latest move, the senator has continued to push for policies to stop debanking. For example, last year, JPMorgan closed the accounts of Jack Mallers, the chief executive of Bitcoin payments firm Strike. The case added to the wider debate over how banks handle crypto-related clients.
In response, Lummis criticized JPMorgan, saying the bank did not provide a clear or valid reason for closing the accounts. She said the bank only pointed to activities found during routine checks. As a result, she argued that the explanation fell short and did not justify the shutdown.
Meanwhile, Alex Thorn, Galaxy Digital’s head of firmwide research, also welcomed the move. He said the latest step could signal that Operation Chokepoint 2.0 is nearing its end.