Crypto Debanking: Regulators Need a Fresh Look, Says Federal Reserve Chair Jerome Powell

Federal Reserve Chair Jerome Powell has called on regulators to reassess the issue of crypto debanking, a phenomenon where crypto businesses are denied access to the US banking system. Speaking at a Senate Banking Committee hearing on February 11, Powell acknowledged the concerns raised by crypto industry leaders and expressed his commitment to working towards a solution.

Operation Choke Point 2.0: A Coordinated Effort to Debank Crypto Firms?

Powell’s comments come in response to allegations of an alleged coordinated effort to debank crypto firms, dubbed Operation Choke Point 2.0. Crypto CEOs and big tech executives have raised concerns about unfair treatment, with some claiming that regulators have deliberately targeted crypto businesses. Powell dismissed these claims, stating that “we don’t intentionally do these things” and emphasizing the need for regulators to take a fresh look at the issue.

A Commitment to Ending Unconstitutional Debanking Practices

When asked by Senate Banking Committee Chair Tim Scott if he would commit to ending unconstitutional debanking practices, Powell replied, “Yes, I will commit to working with you on that.” This commitment is seen as a significant step forward in addressing the concerns of the crypto industry.

Crypto Debanking: A Growing Concern on Capitol Hill

Crypto debanking has become a major topic of discussion on Capitol Hill, with investigations led by Coinbase and Nic Carter, a partner at Castle Island Ventures. The issue gained traction last year, following the collapse of Signature and Silvergate banks, which were found to have had their crypto dealings considered by regulators when making final decisions.

Regulatory Scrutiny and Calls for Clarity

Both chambers of Congress have launched probes into the issue, with lawmakers in the Senate and House of Representatives holding hearings on crypto debanking. Even crypto-skeptic legislators like Senator Elizabeth Warren have called for further scrutiny of the concerns raised by digital asset platforms. The need for regulatory clarity on crypto issues has been highlighted, with some calling for a framework similar to the EU’s Markets in Crypto Assets (MiCA) regulation.

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