The U.S. Federal Reserve has initiated a formal 60-day comment period on a proposal to permanently remove "reputation risk" as a factor in bank supervision, a move widely seen as ending the so-called "Operation Chokepoint 2.0" that crypto advocates say led to widespread debanking of digital asset firms.
The Fed announced on Monday that it is seeking public feedback to codify into law a policy change first announced in June 2025, when it directed its supervisors to stop pressuring banks to close client accounts based on reputational concerns. Under the new framework, banks would only be able to make decisions about clients based on traditional financial risk management metrics like credit, liquidity, and market risk.
Vice Chair for Supervision Michelle Bowman stated, "We have heard troubling cases of debanking — where supervisors use concerns about reputation risk to pressure financial institutions to debank customers because of their political views, religious beliefs, or involvement in disfavored but lawful businesses. Discrimination by financial institutions on these bases is unlawful and does not have a role in the Federal Reserve's supervisory framework."
The term "Operation Chokepoint 2.0" has been used within the crypto industry to describe what they perceived as a coordinated effort by the Biden administration and banking regulators to cut off crypto firms from traditional banking services. Senator Cynthia Lummis (R-WY) praised the Fed's move, posting on X that "It's not the Fed's role to play both judge and jury for banking digital asset companies. Glad to see this important step to permanently remove 'reputation risk' from Fed policy and put Operation Chokepoint 2.0 to rest so America can become the digital asset capital of the world."
Policy experts caution that while removing informal supervisory pressure is significant, legislation is still needed for durable rules. Sudhakar Lakshmanaraja, founder of Web3 policy body Digital South Trust, told Decrypt that Congress should "settle this through clear crypto market structure and stablecoin legislation such as the CLARITY Act and the GENIUS Act," to provide predictable banking access instead of "discretionary supervisory signals."
The announcement comes amid ongoing legal battles related to debanking. Former President Donald Trump is currently in a $5 billion lawsuit against JPMorgan, alleging the bank unlawfully closed his accounts for political reasons in 2021. A former JPMorgan executive recently acknowledged in court that the bank closed Trump's accounts following the January 6 Capitol riots.
In August 2025, President Trump signed an executive order directing federal banking regulators to adopt policies preventing "politicized or unlawful debanking," with the White House stating the administration had "ended Operation Chokepoint 2.0 once and for all."
The Fed's comment period closes in 60 days, after which a final rule is expected to be published in the Federal Register.
