Fed chair Powell agrees to help end crypto debanking

Federal Reserve chair Jerome Powell told the U.S. Senate that regulators should” take a fresh look” at the crypto debanking debacle.

Speaking at a Senate Banking Committee hearing on Feb. 11, Powell said it was time for agencies to reassess reports of crypto businesses being denied access to the U.S. banking system.

Crypto industry leaders have long criticized the impact of Operation Choke Point 2.0, a term used to describe an alleged coordinated effort to debank crypto firms. After crypto CEOs raised concerns, big tech executives also came forward with similar claims of unfair treatment.

“We don’t intentionally do these things,” Powell said, adding that “we need to be working on that.” the Fed chair responded to a question from Senate Banking Committee chair Tim Scott. Republican Senator Scott also asked if Powell would commit to ending unconstitutional debanking practices. “Yes” Powell declared during the hearing.

“I will commit to working with you on that… Look, I think it’s fair to take a fresh look at debanking.” Powell told Sen. Scott and the Committee.

Crypto debanking became a major topic on Capitol Hill last year, following investigations led by Coinbase and Nic Carter, a partner at Castle Island Ventures.

Carter uncovered evidence related to the Signature and Silvergate bank collapses, revealing that regulators considered the banks’ crypto dealings when making their final decisions.

Coinbase sued the Federal Deposit Insurance Corporation, discovering “pause letters” issued to financial institutions and a trove of OCP 2.0 documents. Senator Cynthia Lummis warned FDIC staffers against destroying any documents amid a bi-cameral inquiry.

Both chambers of Congress have now launched probes into the issue. Lawmakers in the Senate and House of Representatives held hearings on crypto debanking last week, where even crypto-skeptic legislators like Senator Elizabeth Warren called for further scrutiny of the concerns raised by digital asset platforms.