U.S. Rep. French Hill, who has been a central figure in pushing for cryptocurrency policy in Congress, released a report stating that the U.S. government has intentionally blocked the development of cryptocurrencies for years.
The Republican chairman of the House Financial Services Committee released a lengthy report on Monday detailing federal government activity that he believes is representative of a campaign to quell U.S. digital asset activity during the Biden administration. While the Senate is still trying to craft the next big step in crypto legislation, Hill is looking to solidify the narrative that an unfriendly U.S. government is enacting what the industry and its Republican allies are calling “Operation Choke Point 2.0.”
The original “bottleneck” was a government task force designed to warn banks about legitimate industries that regulators, including the Federal Deposit Insurance Corporation, considered particularly risky, such as payday lenders and ATM operators. Amid backlash against the controversial policy, some Republican regulatory appointees, particularly in the gun industry, have insisted that banks must handle any legal business.
With this cryptocurrency-focused iteration, Hill’s report looks at the systemic “de-banking” of the financial sector towards digital asset companies and their executives. “The Biden administration is seeking to make it nearly impossible to engage in digital asset-related activities,” the report said. “To do so, it is leveraging a regulatory regime that provides too little certainty for financial institutions and gives regulators too much discretion.”
None of the report’s conclusions will come as a surprise to those who have followed U.S. cryptocurrency regulation in recent years. It highlights the SEC’s now-abandoned preference for developing its digital asset policies through enforcement cases and examines the restrictions imposed by banking agencies such as the Federal Reserve on regulated banks engaging in digital asset activities.
The document argued that Biden-era regulators also failed to establish a clear regulatory regime for cryptocurrencies and warned bankers about it, “describing the digital asset ecosystem as an industry susceptible to market volatility and risk.” During that period – and especially in 2022 – the industry has seen a large number of high-profile company failures and fraud cases, and during President Joe Biden’s four-year term, the leading asset – Bitcoin rising from about $34,000 to about $94,000, but also fell below $17,000 in late 2022. A number of banks closely tied to the industry are also expected to fail in 2023.
This year, BTC hit all-time highs above $126,000, but fell rapidly in recent weeks to around $84,000 at the beginning of this week.
One of the industry’s great strengths, however, is its relationship with President Donald Trump’s White House and Congress. Earlier this year, lawmakers passed a bill to regulate U.S. stablecoin issuers, the first major crypto legislation to become law. The House also approved a bill to oversee the broader digital asset market, although the Senate is still trying to catch up.
“Importantly, the Trump administration’s financial regulators have rescinded many of the Biden-era guidance, oversight and regulatory letters, explanatory letters, and rules that facilitated the de-banking of the digital asset ecosystem by certain regulators,” the report states.
