On April 25, the Federal Reserve announced a significant decision: to revoke the 2022 regulatory guidance on banks' cryptocurrency assets and dollar token businesses, abolish the related "no objection" procedures from 2023, and withdraw from the previously issued policy statement on the risks of cryptocurrency business in conjunction with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC).

Choke Point 2.0: The Stifling Action Against the Crypto Industry

"Choke Point 2.0" is a term used to describe a series of banking regulatory policies during the Biden administration aimed at the cryptocurrency industry. The name is derived from the "Choke Point" action during the Obama era, which referred to achieving regulatory goals by pressuring banks to cut off financial services to specific industries.

In the crypto market, Choke Point 2.0 generally refers to the period between 2022 and 2023 when major U.S. financial regulatory agencies—the Federal Reserve, FDIC, and OCC—strongly discouraged banks from engaging in cryptocurrency-related businesses through a series of guidance and policy statements, indirectly limiting the connection between crypto companies and the traditional banking system.

It all began in 2022 when the Federal Reserve issued a regulatory letter requiring state member banks to report in advance before engaging in cryptocurrency business. This appeared to be a procedural requirement but significantly raised the threshold for banks to enter the crypto space.

By early 2023, regulatory pressure intensified further. The Federal Reserve, FDIC, and OCC jointly issued a statement clearly stating that issuing or holding cryptocurrency on public, decentralized networks "is very likely inconsistent with safe and sound banking practices." In the same year, regulators also required banks to obtain "no objection" permission from regulatory agencies before engaging in dollar token (i.e., stablecoin) business. This process was not only complex and time-consuming but also provided regulators with veto power.

As a result, many referred to this wave of regulatory pressure as "Choke Point 2.0." Nic Carter, the former chief cryptocurrency analyst at Fidelity Investments, described this series of actions in a detailed analysis as "a precise and extensive crackdown on the crypto industry through the banking system."

He pointed out that the goal of regulators was to sever the connection between crypto companies and the fiat currency system by making it more difficult for banks to serve the crypto industry. This not only limited the ability of crypto companies to open accounts and access payment channels but also severely impacted the fiat inflow and outflow channels for stablecoin issuers and exchanges. Some crypto companies even faced the risk of "completely losing banking services," threatening the liquidity of stablecoins and the operations of exchanges.

The FTX Collapse: The Catalyst for Regulatory Pressure

Choke Point 2.0 is closely linked to the collapse of the FTX exchange in November 2022. The FTX collapse resulted in billions of dollars in customer losses and a plummet in market confidence. The crypto credit crisis of 2022 did not significantly impact traditional finance, but regulators clearly wanted to prevent future risks by taking preemptive action. Thus, the regulatory system limited banks' contact with the crypto industry to prevent risks from spilling over into the banking system.

Crypto-friendly banks naturally became the primary targets of regulation. Silvergate and Signature were among the few banks willing to serve crypto clients at the time, thus facing immense pressure. In December 2022, Senators Elizabeth Warren, John Kennedy, and Roger Marshall jointly wrote to Silvergate, criticizing it for failing to detect suspicious activities related to FTX and its affiliate Alameda Research.

Silvergate subsequently faced a bank run due to the FTX collapse, with its stock price plummeting from a high of $160 in March 2022 to $11.55 in January 2023. Signature announced it would reduce its crypto deposits from $23 billion to $10 billion and completely exit the stablecoin business. Another bank serving crypto clients, Metropolitan Commercial, also announced the closure of its crypto business in January 2023.

A Shift in Banking Regulation Under Trump

In 2025, with Trump returning to the White House, the regulatory environment for crypto in the U.S. underwent significant changes. On March 7, the first White House cryptocurrency summit was held, and the OCC issued a series of explanatory documents allowing national banks to provide services such as cryptocurrency custody, stablecoin reserves, and blockchain node participation without special approval. This overturned the restrictive guidance from the Biden administration that required banks to consult regulators in advance.

OCC Acting Comptroller Hood stated, "Digital assets should and must be a part of the U.S. economy." The new policy allows banks to securely store private keys for customers, hold reserves of stablecoins pegged 1:1 to the dollar, and act as nodes to validate blockchain transactions, providing flexibility for banks to deeply integrate into the digital asset space.

The OCC's shift may be closely related to Trump's commitments. At this year's White House cryptocurrency summit, Trump stated, "Some people have been harmed, and their actions are absurd… This will all end soon." He criticized Choke Point 2.0 for "forcing banks to close crypto business accounts, weaponizing the government against the entire industry."

On April 17, Powell further clarified the direction of regulatory easing in a speech at the Chicago Economic Club, suggesting that there is "room for relaxation" in the current cryptocurrency regulatory policies for banking institutions. He acknowledged the mainstreaming trend of cryptocurrencies in recent years, noting that regulators had been cautious due to "a series of explosions and fraud incidents," but that the market had fundamentally changed and needed a clear regulatory framework for stablecoins, signaling support for innovation.

Today, the Federal Reserve officially revoked the relevant guidance of Choke Point 2.0, meaning banks no longer need to report for crypto business, and related activities will be monitored through regular regulatory procedures. This aligns with the Trump administration's commitment to abolish policies that "exclude crypto companies from banking services," and investigations by the House Oversight Committee and documents disclosed by the FDIC have also promoted policy transparency.

The Next Positive Regulatory Development for the Crypto Market?

Since 2025, the crypto market has seen a continuous stream of positive news. Following the SEC's confirmation of several altcoin ETF applications, the return of traditional crypto market makers, the repeal of DeFi broker rules, the dismissal of a series of crypto litigation cases, and Trump's personal appointment of a new pro-crypto SEC chair, the latest good news comes from the banking regulatory level. The Federal Reserve's announcement to revoke Choke Point 2.0 marks the end of a three-year period of high-pressure regulation on the interactions between banks and the crypto market.

The most direct manifestation of this positive development is the significant reduction in the threshold for banks to serve the crypto industry, a substantial decrease in legal risks, and the likelihood that more banks will provide accounts, payment, and custody services for crypto companies. Additionally, the fiat channels for stablecoin issuers and exchanges will become smoother as a result.

More importantly, the Trump administration has prioritized crypto-friendly policies, and Powell's affirmation of a regulatory framework for stablecoins injects clear expectations into the market. These concentrated positive signals may further attract more traditional financial institutions into the market, boosting market liquidity and enhancing investor confidence.

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