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ARTICLE · 10 JANUARY 2025

Operation Chokepoint 2.0: Regulatory Overreach And The Battle For Crypto's Future

Gesmer Updegrove LLP
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So, what's this chokepoint thing everyone's talking about? In recent months, the cryptocurrency industry has been rocked by revelations of regulatory overreach that have stifled innovation...

United StatesTechnology
Braeden Anderson
Braeden Anderson

So, what's this chokepoint thing everyone's talking about? In recent months, the cryptocurrency industry has been rocked by revelations of regulatory overreach that have stifled innovation, suppressed lawful businesses, and driven entire financial institutions to the brink. At the center of the controversy is Operation Chokepoint 2.0, a covert effort by federal banking regulators to isolate the crypto industry by pressuring banks to cut ties with crypto-related businesses. Armed with vague concepts like "reputational risk," regulators have wielded their supervisory power to devastating effect—ushering in a chilling new era of financial exclusion.

Newly uncovered documents, secured through Freedom of Information Act (FOIA) requests by Coinbase and its Chief Legal Officer Paul Grewal, provide damning evidence of the Federal Deposit Insurance Corporation's (FDIC) role in discouraging banks from engaging in crypto-related activities. The unredacted letters and

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