Background
Joe Ciccolo, founder and president of BitAML, described the recent court ruling as proof that crypto oversight in the previous administration was driven as much by “political and reputational considerations” as by traditional safety‑and‑soundness analysis.
The term “Operation Choke Point 2.0” borrows from an Obama‑era program that pressured banks to cut off gun dealers and payday lenders. In the crypto context it alleges a coordinated effort by U.S. bank regulators—including the FDIC, Federal Reserve, and OCC—to restrict banking access for crypto firms through informal “pause letters.”
The Court Ruling
When Coinbase requested the alleged letters in November 2023, the FDIC denied the request, claiming the documents were exempt “by their very nature.” The agency later said the exemption was based on record type, not a document‑by‑document review.
After History Associates sued in June 2024, U.S. District Judge Ana Reyes ordered the FDIC to produce the letters and warned the agency of a “lack of good‑faith effort” in its redactions. It took four court orders and six productions before the FDIC complied with all responsive documents.
Impact on the Crypto Industry
Coinbase’s chief legal officer Paul Grewal celebrated the outcome on X, stating, “We successfully uncovered dozens of crypto ‘pause letters’—indisputable proof of OCP2.0 and the coordinated effort to sideline the industry.”
- Provides concrete evidence of regulator‑initiated pressure on crypto firms.
- Highlights potential legal vulnerabilities for banks that comply with informal directives.
- Raises questions about the fairness and transparency of crypto supervision.
Calls for Transparent Oversight
Ciccolo urged that oversight be “transparent, risk‑based, and grounded in clear supervisory standards, not informal pressure conveyed through cryptic ‘pause letters.’” He warned that behind‑the‑scenes actions erode trust in the supervisory framework.
What Comes Next
The parties will file a formal dismissal once the FDIC remits payment. The regulator has not responded to a request for comment from Decrypt.
Stakeholders are now watching for legislative or regulatory reforms that could codify clearer, public processes for crypto supervision and prevent future “Operation Choke Point 2.0”‑style interventions.