Operation Choke Point 2.0

Operation Choke Point 2.0 is not the name of an announced government program. Nic Carter publicly used it on 8 February 2023 for his thesis that actions by several US regulators were jointly cutting crypto firms off from banks. The name refers to the earlier Operation Choke Point, but that analogy alone proves neither common direction, legal mandate, nor identical purpose. [1]

One documented mechanism was FDIC FIL-16-2022 of 7 April 2022. It directed FDIC-supervised banks to notify the agency of planned or existing crypto activities and provide information for supervisory feedback. Its broad definition covered custody, stablecoin reserves, asset issuance, market making, settlement, node operation, and lending; inclusion did not itself mean that an activity was permissible. [2]

After crypto-market failures and turmoil in 2022, the Fed, FDIC, and OCC issued a joint statement on 3 January 2023. They listed fraud, legal uncertainty, misleading representations, volatility, stablecoin runs, interconnectedness, and immature risk management. They also said banks were neither prohibited nor discouraged from serving any specific customer class; the dispute is therefore whether supervision left a workable route in practice, not whether risks existed. [3]

In October 2023, the independent FDIC Office of Inspector General found that the agency had not completed a risk assessment and that its feedback process was unclear. Between March 2022 and May 2023 it sent pause letters without defining a deadline for reviewing submissions, answering, or ending the process. The audit warned that delay and ambiguity could make the FDIC appear unsupportive of banks’ crypto activities. [4]

In January 2025 the FDIC released 25 redacted pause letters sent to 24 institutions, followed in February by 175 more documents. The FDIC’s then leadership said requests were met almost universally with resistance, more questions, months of silence, or directions to pause or avoid expansion, and that most banks stopped trying. These records are the strongest public evidence of actual regulatory friction rather than only an industry perception. [5]

The records still do not explain every account closure. A commercial bank may decline a customer because of its own risk appetite, capital, liquidity, sanctions, AML, fraud, or compliance costs, and redactions hide parts of the internal conversation. A sound assessment separates a direct regulatory instruction, a prolonged supervisory process, a bank’s precautionary decision, and the political conclusion that they formed a coordinated campaign. [6]

The rules changed in 2025. On 7 March the OCC removed the prior supervisory non-objection requirement under Interpretive Letter 1179; on 28 March the FDIC rescinded FIL-16-2022 and expressly allowed permissible crypto activities without prior approval; and on 24 April the Fed and FDIC withdrew two joint statements from 2023. Ordinary requirements for safety, legality, and risk management remained. [7]

For Bitcoin, the issue mainly concerns the boundary between an open protocol and banking on- and off-ramps. Losing an account may interrupt dollar payments for an exchange, custodian, or payment company, but it does not stop block validation or a self-custody transfer between two users. Verifying a particular claim requires the date, agency, institution type, exact letter, legal authority, bank response, and later rule changes. [8]