Iain Murray, Vice President for Strategy and Senior Fellow at the Competitive Enterprise Institute (CEI), is raising concerns about what he sees as a resurgence of regulatory overreach reminiscent of the Obama-era "Operation Choke Point," employed under the Biden administration.
Murray warned that financial regulators, particularly those overseeing banks with ties to the cryptocurrency industry, may be engaging in tactics that stifle innovation and undermine the free market.
“Unlike Choke Point 1.0, I don’t believe the current Choke Point 2.0 has used such a title internally within the administration, which makes it harder to pin down,” Murray told Federal Newswire. “However, I would ask all financial regulatory agencies to report their correspondence and actions on the subject of ‘reputational risk,’ and whether and how that was communicated as a concern to regulated banks.”
In regard to “Choke Point 1.0” Murray was referencing the original 2013 initiative that pressured banks to sever ties with certain industries deemed high-risk by regulators.
According to CCN, “Operation Chokepoint 2.0” refers to an alleged initiative by U.S. government agencies to restrict banking services for cryptocurrency and certain tech industries.
This effort is seen as a continuation of the original “Operation Chokepoint,” which targeted industries like payday lending and firearms dealers by pressuring banks to sever ties, effectively limiting these businesses' access to financial services.
An author and expert on free markets, labor policy and finance, Murray is Vice President for Strategy and Senior Fellow at CEI, where he directs the Center for Economic Freedom. He has written extensively on government overreach and is a contributing editor at Instapundit.com.
A vocal critic of "Operation Choke Point," Murray has long warned about the dangers of government overreach, particularly when regulators pressure financial institutions to avoid certain sectors.
Murray recently wrote in a CEI piece that over two decades that the CEI has warned about the dangers of "debanking," a practice in which government regulators encourage banks to sever ties with certain businesses, particularly those deemed undesirable.
This was most notably seen in the 2010s with "Operation Choke Point," an initiative that pressured banks to cut off financial services to legal industries, such as payday lenders, under the pretext of combating fraud.
While the original operation was shut down during the Trump administration, the Biden administration revived similar tactics through "Operation Choke Point 2.0," which has targeted crypto businesses and even pushed banks like Silvergate toward bankruptcy.
“The closure of Silvergate and other banks that specialized in crypto along with the stifling of the Diem cryptocurrency initiative were clear warning signs from regulators not to pursue innovation in digital currencies,” Murray said. “That any innovation has been able to happen at all in this area under these conditions is remarkable.”
CEI continues to advocate against this form of regulatory overreach, arguing that it undermines trust between banks and customers and hinders innovation.
“I would also particularly examine regulatory actions surrounding the regulation of banks with crypto interests on the ‘safety and soundness’ basis and how that may have influenced the closure of Silvergate and other banks,” Murray said.
Notably, former PayPal David Sacks executive David Sacks has been named "White House A.I. & Crypto Czar" by the incoming Trump administration.
Murray emphasized the need for a closer examination by Sacks of how the Biden administration’s regulatory actions, especially those related to cryptocurrency, are impacting financial institutions.
“What Sacks should be looking for is patterns of behavior that involved regulators indicating that providing financial services to legal but disfavored industries would be frowned upon or lead to enhanced regulatory supervision,” he said. “It is those patterns of behavior that need to be stopped.”
He also pointed to the potentially damaging effects of anti-money laundering (AML) and Know Your Customer (KYC) regulations, which he believes contribute to the problem of debanking without effectively addressing criminal activity.
Finally, Sacks should also audit the effectiveness of AML/KYC regulations and guidance. Research suggests that they are ineffective at stopping crime, but have helped contribute to the debanking problem,” he said.
Murray’s broader concern is that regulatory actions like these are stifling innovation and discouraging the development of new financial technologies.
He also stressed the need for stronger leadership to prevent further regulatory overreach.
“As I have said, the end of Choke Point 1.0 was only a temporary victory because the model survived and was still available for use,” he said. “What is needed is for the President and his agency heads to make it clear to regulators that such tactics will not be tolerated. An Executive Order should forbid any jawboning by regulators and require that all communications between regulators and regulated bodies be recorded and logged, especially when it touches on First Amendment-protected speech and association.”
Murray has also called for changes to regulations that emphasize financial institutions' obligations to vet their customers.
“Regulators should also issue new guidance that reduces the emphasis put on Know Your Customer rules to allow for free association between banks and customers without the assumption that anyone with complex financial affairs might be financing terrorism,” he said. “As I say in this article, it is discipline on the regulators that is needed, rather than new regulations per se.”
Looking to the future, Murray is optimistic about the potential for regulatory reforms under the next administration.
“Yes, it is quite clear that the Trump administration will be much more friendly to alternative financial assets and technological entrepreneurialism,” he said. “The incoming tech/science team at the White House demonstrates that. I expect financial regulators to do things like establishing sandboxes to allow the development of new financial technology without the chilling effect of jawboning regulators.”
Murray also suggested that future policy should focus on expanding the availability of financial services to underserved communities, rather than restricting access.
"I would certainly review the activities of that committee with a view to any potential conflicts of interest," he said. "I would also look to re-establish the committee with a new mission of expanding the range of financial services available to underserved communities, rather than restricting them."
Ultimately, Murray believes that much of the regulatory burden facing financial innovation today comes from behind-the-scenes actions.
“As I mentioned in my very first article on Operation Choke Point in 2014, there was certainly a push by CDFIs to establish themselves as the only player in town when it comes to small dollar loans,” he said. “I am, however, unaware of any similar activity in OCP2.0, but that is not to say there has not been any. I would expect it to have taken place behind the scenes and off the record.”
For Murray, the fight against regulatory overreach is far from over.
In an interview with Fiat Reporter, Cato Institute policy analyst Nicholas Anthony claimed "Operation Choke Point 2.0" is harming the U.S. cryptocurrency industry by pressuring banks to sever ties with crypto businesses, undermining innovation and eroding trust in the rule of law.
Anthony argues that this de-banking initiative mirrors the original 2013 "Operation Choke Point," which targeted high-risk industries like payday lenders, and now appears to focus on cryptocurrency firms.
The FDIC's alleged 2022 advice to pause crypto-related banking activities has raised concerns, with figures like David Sacks calling for investigations into the government’s role in these practices.
Advocates like Anthony and Murray have urged Congress to reform banking oversight, lift confidentiality rules, and eliminate regulatory tools that facilitate such de-banking actions.
In an X post, Tesla CEO and X founder Elon Musk asked “Did you know that 30 tech founders were secretly debanked?” in response to a clip from The Joe Rogan Experience podcast featuring Marc Andreessen.
Andreessen said on X, “We’ve had, like, 30 founders debanked in the last four years,” while discussing how Chokepoint 2.0 impacts tech startups and individuals.
Custodia Bank CEO Caitlin Long said on X that her company has been “debanked repeatedly” and referenced ongoing legal action, posting “Keep an eye on our pending lawsuit against the Fed. Oral argument is scheduled for January 21.”
Long’s comments follow discussions around Chokepoint 2.0 and its effect on financial access for lawful businesses.
Sam Kazemian, founder of Frax Finance, shared on X that JPMorgan informed him they would close accounts where the primary source of income or wealth was tied to cryptocurrency.
He claimed the directive came "directly from the top" at JP Morgan, referencing CEO Jamie Dimon.
Kazemian added his name to the "debanked OCP list," emphasizing the reality of crypto-related debanking and expressing hope for a resolution.
