A Shift in Banking Regulation Under the Trump Administration

On April 25, the Federal Reserve announced a landmark decision: revoking its 2022 regulatory guidance on banks’ crypto asset and U.S. dollar token businesses, terminating the 2023 "no-objection" review process, and withdrawing a joint policy statement with the FDIC and OCC on crypto-related risks.

Operation Chokepoint 2.0: Marginalizing the Crypto Industry

"Operation Chokepoint 2.0" is the crypto industry’s term for the Biden-era banking policies that pressured financial institutions to sever ties with crypto firms. The name echoes the Obama-era "Operation Chokepoint," which aimed to cut off financial services to high-risk industries through regulatory coercion.

Between 2022 and 2023, U.S. regulators—the Fed, FDIC, and OCC—issued guidelines and statements strongly discouraging banks from engaging with crypto assets, indirectly limiting the sector’s access to traditional banking. This began in 2022 when the Fed mandated that state-chartered banks obtain pre-approval for crypto activities, effectively raising barriers to entry.

By early 2023, regulators escalated their stance, declaring that holding or issuing crypto on public decentralized networks was "highly likely incompatible with safe banking practices." Banks were also required to seek pre-approval for stablecoin operations, a complex process granting regulators veto power.

Nic Carter, former crypto analyst at Fidelity, described these moves as a "sophisticated, broad-based crackdown" designed to isolate crypto from the fiat system. This policy destabilized crypto firms’ banking relationships, threatened stablecoin liquidity, and forced exchanges to scramble for compliant payment channels.

The FTX Collapse: Catalyst for Regulatory Crackdown

The 2022 implosion of FTX, which wiped out billions in customer funds, became the tipping point. Despite the crypto credit crisis having minimal impact on traditional finance, regulators preemptively tightened banking restrictions to insulate the broader financial system.

Crypto-friendly banks like Silvergate and Signature bore the brunt. In December 2022, Senators Elizabeth Warren and others accused Silvergate of failing to flag FTX’s suspicious activities. By January 2023, Silvergate’s stock had plummeted 93% from its peak, while Signature slashed crypto deposits by 57% and exited stablecoins entirely. Metropolitan Commercial Bank similarly abandoned crypto services.

Trump’s Regulatory Reversal

The 2025 return of the Trump administration marked a stark policy shift. On March 7, the OCC issued new guidelines allowing national banks to offer crypto custody, stablecoin reserves, and blockchain node services without special approval—overturning Biden-era restrictions.

Acting Comptroller Jonathan Hood declared, "Digital assets must become part of the U.S. economy." The rules now permit banks to store private keys, hold stablecoin reserves, and validate blockchain transactions, signaling deeper institutional integration with crypto.

At a White House crypto summit, Trump vowed to end "Operation Chokepoint 2.0," criticizing it as a weaponized campaign to shutter crypto accounts. Fed Chair Jerome Powell later echoed this stance, acknowledging crypto’s maturation and calling for clearer stablecoin frameworks to foster innovation.

A New Era for Crypto Banking

The Fed’s April 25 move to scrap "Chokepoint 2.0" guidelines eliminates prior reporting requirements, aligning with Trump’s pledge to restore crypto access to banking. This deregulation lowers legal risks for banks, likely accelerating the reopening of accounts, payment systems, and custody services for crypto firms. Stablecoin issuers and exchanges will also benefit from smoother fiat gateways.

The Next Regulatory Boost?

2025 has seen a cascade of crypto-positive developments: SEC approvals for altcoin ETFs, revived market-making activity, repealed DeFi rules, dismissed lawsuits, and Trump’s appointment of a pro-crypto SEC chair. The Fed’s latest action concludes a three-year regulatory siege.

With banks now freer to engage, traditional financial institutions may flood into the market, boosting liquidity and investor confidence. Powell’s endorsement of stablecoin frameworks adds further clarity, positioning crypto for its most institutional-friendly era yet.