The Federal Reserve has significantly relaxed its regulatory stance on cryptocurrency banking, marking a dramatic shift from policies that digital asset firms characterized as "Operation Chokepoint 2.0." The policy reversal comes after sustained criticism from state-chartered crypto banks who claimed the previous framework effectively excluded them from traditional banking services.
In a significant policy pivot, the Federal Reserve has announced sweeping changes to its approach toward cryptocurrency-focused banking institutions, rolling back restrictions that had drawn fierce criticism from the digital asset industry.
The new framework represents a stark departure from policies implemented over the past two years, which crypto advocates branded as "Operation Chokepoint 2.0"βa reference to an Obama-era initiative that allegedly pressured banks to sever ties with certain industries. State-chartered banks serving cryptocurrency businesses had complained that the Fed's previous guidelines effectively denied them access to essential banking services, including master accounts that facilitate transactions with the central bank.
Under the revised policy, the Federal Reserve will streamline the application process for crypto-related banks seeking master accounts and other services. The central bank has committed to more transparent evaluation criteria and faster decision timelines, addressing long-standing complaints about regulatory uncertainty that had plagued the sector.
Industry leaders have welcomed the announcement as a watershed moment for cryptocurrency integration into mainstream finance. The previous restrictive environment had forced many crypto firms to operate through limited banking channels or seek services overseas, creating operational challenges and potential regulatory gaps.
The policy overhaul comes amid broader regulatory shifts in Washington, where lawmakers and regulators have increasingly recognized the need for clear, workable frameworks for digital assets rather than restrictive measures that push innovation offshore. Several state-chartered institutions, including Wyoming's crypto-friendly banks, had been in prolonged limbo waiting for Federal Reserve approval to access essential banking infrastructure.
Critics of the old approach argued it created a de facto ban on crypto banking without formal rulemaking or public input, circumventing normal regulatory processes. The Fed's reversal suggests the central bank has responded to these concerns while still maintaining its mandate to ensure financial system stability.
While the new policy provides greater access for crypto banks, the Federal Reserve emphasized that institutions will still need to demonstrate robust risk management practices, particularly around anti-money laundering compliance and consumer protection. The central bank's announcement signals a more balanced approachβone that acknowledges cryptocurrency's growing role in finance while maintaining appropriate regulatory oversight.