TLDR
- Trump plans to sign an executive order targeting alleged discriminatory banking practices against crypto companies and conservative groups
- Order directs regulators to investigate violations of credit laws, antitrust statutes, and consumer protection regulations
- Banks found in violation could face financial penalties and regulatory enforcement actions
- Order addresses “Operation Chokepoint 2.0” claims made by crypto executives during Biden administration
- Federal agencies will be directed to dismantle internal policies that enabled debanking and review Federal Reserve access for crypto firms
President Donald Trump is preparing to sign an executive order as early as this week that would protect cryptocurrency companies and conservative organizations from alleged discriminatory banking practices. The order would instruct banking regulators to examine potential violations of equal credit laws, antitrust statutes, and consumer protection regulations in cases where financial institutions terminated customer relationships.
This move represents Trump’s most direct regulatory response to what critics have dubbed “Operation Chokepoint 2.0,” the alleged systematic denial of banking services to crypto companies and politically conservative customers during the Biden administration.
According to a Wall Street Journal report citing administration sources, the draft order reviewed would allow for financial penalties and regulatory enforcement actions against banks found in violation. The order calls on regulators to eliminate internal policies that may have enabled debanking practices.
Trump has personal experience with banking discrimination, telling Decrypt in June that “big banks were very nasty to us” during Biden’s presidency. “The regulators control the banks,” the U.S. President said, noting that federal agencies, not bank executives, are the true decision-makers behind debanking.
What Is “Operation Chokepoint 2.0”?
Crypto executives have claimed that former President Joe Biden began to cut off their industry from banking in late 2022 after the collapse of FTX. Coinbase chief legal officer Paul Grewal testified at a Congressional hearing in February that the Biden-era Federal Deposit Insurance Corporation (FDIC) “bludgeoned the banks” with examinations and questions around crypto and stablecoins until they “relented under the pressure.”
A Coinbase-supported Freedom of Information Act lawsuit against the FDIC revealed the agency asked certain financial institutions to pause crypto banking activities. This evidence, according to Grewal, showed the industry’s claim “wasn’t just some crypto conspiracy theory.”
Crypto venture capitalist Nic Carter coined the term “Operation Choke Point 2.0” in February 2023 to describe the perceived debanking phenomenon, taking inspiration from the Justice Department’s “Operation Choke Point” against banks and payday lenders in the 2010s.
The FDIC has already been forced to release multiple documents revealing apparent efforts to discourage banks from serving crypto companies. Coinbase continues legal battles to expose alleged “Operation Chokepoint 2.0” documents, with Grewal recently accusing the FDIC of systematic obstruction despite court orders compelling disclosure.
Legal Challenges and Banking Industry Response
When asked about the constitutional authority for such an order, Even Alex Chandra, partner at Indonesia-based law firm IGNOS Law Alliance, told Decrypt that executive orders can only enforce existing laws, not create new protections.
“It’s an executive order, so the president [is] only able to enforce existing laws, not create something from nothing. So it could be challenged if its scope is outside existing law,” Chandra said.
Chandra noted that because political affiliation is not currently a protected class under federal anti-discrimination law, “the government lacks a clear statutory basis to regulate or penalize this practice.”
The banking industry calls the practice “derisking,” and financial institutions have broad discretion to close accounts, whether the account holder poses a legal, financial or reputational risk to the firm. Banks have reportedly responded by revising their policies to explicitly prohibit political discrimination and engaging with Republican state officials to demonstrate compliance.
The Federal Reserve said in June that it would stop examining for reputational risk following similar moves made by the Office of the Comptroller of the Currency and the FDIC.
Bo Hines, Executive Director of the White House’s Presidential Working Group on Digital Assets, confirmed administrative action was forthcoming, previously telling Decrypt that “the industry can expect something in short order.”
If signed, the executive order would direct federal agencies to dismantle internal policies that enabled debanking, refer violations to the Justice Department, and review how the Federal Reserve handles access to critical banking infrastructure for crypto firms.
The order will also reportedly probe the role of banks in supposedly denying or cancelling services to political conservatives. The draft didn’t name any specific banks, but it did criticize the role of financial institutions that are said to have helped federal investigators with probing the January 6, 2021, riots at the US Capitol.
The proposed order references incidents, including Bank of America’s decision to close accounts of a Christian organization in Uganda, which the bank said was due to its policy against serving small overseas businesses.
The order also directs the US government’s Small Business Administration to review banking practices that guarantee the loans made by the agency to small businesses.
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Source: https://blockonomi.com/trump-administration-targets-operation-chokepoint-2-0-with-new-executive-order/