In a significant development for the crypto industry, Federal Reserve Chair Jerome Powell acknowledged concerns over the debanking of crypto businesses and suggested it was time for regulators to reassess the issue.
Speaking before the Senate Banking Committee on February 11, Powell responded to growing criticism that crypto firms are being unfairly denied access to the U.S. banking system.
During the hearing, Powell was questioned by Senate Banking Committee Chair Tim Scott about the alleged exclusion of crypto businesses from the financial sector. Crypto leaders have long pointed to what they call Operation Choke Point 2.0—an alleged coordinated effort by regulators to sever crypto firms’ ties with traditional banking institutions.
“We don’t intentionally do these things,” Powell stated, emphasizing that regulators need to work on addressing these concerns.
When Senator Scott pressed for a commitment to end unconstitutional debanking practices, Powell responded with a firm “Yes.” He further assured the committee, “I will commit to working with you on that… Look, I think it’s fair to take a fresh look at debanking.”
The issue of crypto debanking has been gaining traction in Washington, with lawmakers from both parties demanding greater transparency from regulatory agencies.
Investigations spearheaded by Coinbase and blockchain venture capitalist Nic Carter uncovered troubling evidence related to the collapses of Signature Bank and Silvergate Bank—two financial institutions with significant crypto exposure. Reports suggest that regulatory decisions regarding these banks factored in their dealings with crypto clients.
Coinbase even took legal action against the Federal Deposit Insurance Corporation (FDIC), uncovering so-called “pause letters” issued to banks, allegedly discouraging them from serving crypto firms. This revelation intensified scrutiny, prompting Senator Cynthia Lummis to warn FDIC staff against destroying documents amid an ongoing bipartisan investigation.
The debate over crypto debanking has also sparked interest beyond industry advocates, with some traditionally crypto-skeptical lawmakers, including Senator Elizabeth Warren, calling for further examination of the issue. This bipartisan push signals a growing recognition that financial regulators may have overstepped in their approach to digital assets.