In November, a conspiracy popular among crypto acolytes burst into the tech mainstream as Marc Andreessen spread the gospel of “Operation Chokepoint 2.0” on Joe Rogan's podcast. Over the three-plus hour episode, the a16z cofounder spoke of the plot by financial regulators under the Biden administration to cut off banking access to the crypto industry because of its politically disfavored status. a16z crypto later published a post defining “debanking” as a “tool or weapon” that can be “systematically wielded” by politicians and agencies to neuter entire sectors.
Crypto VC Nic Carter first popularized (and named) the theory of Operation Chokepoint 2.0 in early 2023, soon after the collapse of FTX, as regulators like the Federal Reserve and FDIC began to issue public guidance about the risks that banks face by working with the volatile crypto industry. (He just published an op-ed in Fortune yesterday if you want to read his full take.)
I’ve long been skeptical about the premise, which is based on a real, covert effort by the Department of Justice in the early 2010s to cut off banking access to specific sectors with high risk for fraud and money laundering, including payday lenders, pornography, and firearm dealers, though the ethics around it are still disputed. The key difference is that the DOJ initiative in 2013 happened only behind closed doors. In 2023, regulators were open about their hesitance around crypto, stating concerns through public guidances and speeches.
The job of financial regulators is to promote safety and soundness. They will never tell banks that they cannot work with specific legal industries, but instead will communicate through public and private channels that certain business lines could open institutions to increased supervision and risks. There’s no question that banks began to cut off services to crypto companies in early 2023, but the simplest explanation is that banks were worried about the increased costs and pitfalls posed by the crypto sector, not that they were secretly blocked by a cabal of regulators for political reasons.
But proponents of Operation Chokepoint 2.0 believe the conspiracy went deeper, and that agencies including the Fed and FDIC specifically told banks that they could not work with crypto firms. Carter has maintained that the FDIC communicated to banks that only 15% of their deposits could come from crypto companies—a guidance he says they issued verbally to “obfuscate their crackdown activities.” (There’s also a debate about whether regulators shut down the two largest banks serving the blockchain industry, Silvergate and Signature, simply because of their work in crypto, but that would take up a whole other essay.)
Even as Andreessen’s podcast appearance raised awareness around the narrative, and seemed to establish it as fact in many circles, proponents have yet to surface any hard evidence. Coinbase, for example, sued the FDIC under the Freedom of Information Act to obtain confidential crypto banking correspondence, finally winning a trove of heavily redacted documents last week where the FDIC asked banks to “pause” crypto-related activity as it developed supervisory expectations. “That's all wholly consistent with the public statements that the banking regulators made,” Steven Kelly, the associate director of research at the Yale Program on Financial Stability, told me.
I spoke with Carter and Paul Grewal, Coinbase’s chief legal officer, who both agreed that the claims of debanking lack a smoking gun: any proof that regulators not only voiced concerns about crypto, but told banks not to work with companies and individuals in the space or imposed a hard limit. “Can I say I yet have the full picture of what was communicated and to what degree?” Grewal told me. “I can't, no question.” Still, he said that he expects more proof to come out, pointing to the FDIC’s aggressive redactions as a sign that the agency is trying to prevent key information from coming to light.
Carter insists that the agencies verbally guided the banks, which will make it difficult for any documentation to be disclosed. With the Trump administration just a month away and Republican lawmakers eager to open investigations, we might get more answers in the coming weeks. But until then, as Carter said, “All we have is circumstantial evidence.”
Leo Schwartz
Twitter: @leomschwartz
Email: leo.schwartz@fortune.com
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