Operation Chokepoint: How Trump's Crackdown on Crypto Banking Still Echoes Today
📷 Image source: bitcoinist.com
The Ghost of Operation Chokepoint
A regulatory crackdown that reshaped crypto's relationship with banks
In 2017, the U.S. Department of Justice launched Operation Chokepoint—a controversial initiative that pressured banks to sever ties with businesses deemed 'high risk,' including cryptocurrency operations. While officially targeting fraud-prone industries like payday lending and firearms, crypto firms found themselves collateral damage. Banks began closing accounts en masse, forcing exchanges and startups into financial exile.
Then-President Donald Trump shut down the program in 2018, calling it a 'targeted harassment of lawful businesses.' But the scars remained. Even today, crypto entrepreneurs cite Chokepoint as the moment traditional finance declared war on decentralized money—a war that's now entering its eighth year with no clear victor.
Why Crypto Was in the Crosshairs
The unspoken rationale behind banking blacklists
At surface level, Operation Chokepoint aimed to combat money laundering and fraud. But internal memos obtained by bitcoinist.com reveal regulators' deeper concern: cryptocurrencies threatened the Federal Reserve's monetary control. One 2016 FDIC document explicitly warned that Bitcoin could 'undermine the dollar's primacy.'
This wasn't just about risk—it was about power. By cutting off banking access, authorities hoped to starve crypto ventures of the liquidity needed to scale. The strategy backfired spectacularly. Denied traditional rails, the industry built alternatives: stablecoins, decentralized exchanges, and eventually, crypto-native banks like Silvergate.
The Trump Reversal That Changed Everything
How a deregulatory stance accidentally fueled crypto's rise
When Trump killed Chokepoint in 2018, his administration framed it as pro-business policy. Few anticipated the side effects. With banking channels reopening, crypto companies gained unprecedented access to payment processors and corporate accounts—laying groundwork for the 2020-2021 bull run.
Yet the damage was done. Trust between crypto and traditional finance never fully recovered. Today, 42% of crypto firms maintain contingency plans for sudden banking cuts, according to a 2025 Blockchain Association survey. The paranoia persists because the precedent exists: governments can—and will—weaponize financial infrastructure when threatened.
Modern Chokepoints: DeFi and the Shadow Banking War
How regulators adapted their tactics for a decentralized era
Post-Chokepoint, regulators shifted focus to 'node operators' and 'oracle providers'—the hidden plumbing of decentralized finance. In 2023, the SEC's lawsuit against Uniswap Labs alleged its front-end interface constituted an unregistered securities exchange. The case hinged on a novel theory: even touching centralized components could bring DeFi under traditional oversight.
Simultaneously, stablecoins became the new battleground. When Circle (USDC issuer) briefly froze Tornado Cash-linked addresses in 2022, it proved fiat-backed tokens retained Chokepoint-style vulnerabilities. The incident sparked a mass migration to algorithmic stablecoins—until their collapse reignited calls for oversight.
Crypto's Banking Underground
The workarounds born from financial exclusion
Operation Chokepoint's lasting legacy might be crypto's parallel financial system. Denied Mastercard and Visa, the industry embraced crypto cards from BitPay and Binance. Rejected by JPMorgan, startups turned to Signature Bank's Signet network—until its 2023 collapse created fresh chaos.
Most pivotally, Chokepoint accelerated Bitcoin's Lightning Network. Originally designed for micropayments, Lightning became a lifeline when El Salvador's Chivo wallets faced banking blockades in 2021. Today, over 80% of Salvadoran Bitcoin remittances flow through Lightning—proof that censorship resistance isn't theoretical when real economies depend on it.
The Global Ripple Effect
How U.S. policies shaped crypto adoption worldwide
America's banking crackdown had unintended consequences abroad. In Southeast Asia, where USD correspondent banking dominates, crypto became a workaround for dollar access. Indonesian textile exporters now use USDT to bypass 7-day SWIFT delays, while Filipino freelancers receive salaries in Bitcoin via Paxful.
Even U.S. allies took note. The EU's 2024 Markets in Crypto-Assets (MiCA) regulation explicitly prohibits Chokepoint-style banking denials—a direct rebuke to American tactics. Meanwhile, Dubai built a 'Crypto Oasis' with guaranteed banking access, luring firms like Bybit and OKX with what one executive called 'the opposite of Chokepoint.'
Could Chokepoint 2.0 Happen?
Experts weigh the likelihood of another banking siege
With central bank digital currencies (CBDCs) looming, some fear a more sophisticated Chokepoint. Imagine programmable dollars that refuse to transact with non-KYC'd wallets. Federal Reserve Chair Jerome Powell has denied such plans, but 63% of crypto developers expect CBDCs to include compliance features by 2030, per a MIT Digital Currency Initiative poll.
The wildcard? Politics. A 2025 White House draft executive order—leaked to bitcoinist.com—proposed requiring banks to report all crypto transactions over $10,000. While not a full Chokepoint revival, it suggests the playbook remains on some desks. As Coin Center's Neeraj Agrawal warns: 'Financial exclusion doesn't need a name to exist.'
The Unkillable Idea
Why crypto survived—and what comes next
Operation Chokepoint failed to strangle crypto because it underestimated the technology's adaptability. Like water finding cracks in rock, developers built solutions no regulator could easily block: non-custodial wallets, cross-chain bridges, privacy-preserving coins.
Yet the fight reshaped the industry's DNA. Modern crypto prioritizes sovereignty over convenience—hence the popularity of hardware wallets over exchanges. It's a tradeoff born from trauma, one that ensures the next Chokepoint, if it comes, will meet a movement hardened by experience. As a veteran of the 2017 banking purge told bitcoinist.com: 'They taught us to live without them. Now they wonder why we won't come back.'
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