a16z: Where Is the U.S. Government’s Chokehold on Crypto Coming From, and Which Agencies Are Involved?
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a16z: Where Is the U.S. Government’s Chokehold on Crypto Coming From, and Which Agencies Are Involved?
The phrase "Operation Choke Point 2.0" is sometimes used to refer to government efforts to cut off banking services from "political enemies and disfavored tech startups."
Navigating Web3 tides with focused insightsCompiled by: 0xjs, Jinse Finance
Marc Andreessen, co-founder of a16z, revealed during the Joe Rogan podcast on November 28 that 30 tech founders had their bank accounts shut down in the U.S. due to their involvement with cryptocurrency. In response, a16z crypto published an editorial on December 6 discussing "Debanking: What you need to know." Translated by 0xjs@Jinse Finance, the full text is as follows:
"Debanking" (the termination of banking relationships) has been happening behind the scenes for years, but it's now resurfacing in public discourse. Individuals, policymakers, companies—and most importantly, entrepreneurs vital to American innovation—are speaking out about this issue. Given how often the crypto industry and specific institutions appear in these discussions, here’s a brief explanation to help separate signal from noise.
But first, what is debanking?
In short, debanking refers to law-abiding individuals or entities unexpectedly losing access to banking services—or even being pushed entirely out of the banking system.
Debanking differs from cases where an entity loses banking services after investigations or procedures confirm or suspect fraud, money laundering, or other illegal activities.
Debanking can occur without any apparent investigation, detailed explanation, or advance notice—leaving entities insufficient time to move funds. Most critically: there is no due process, right to appeal, or recourse available.
Why does this matter?
We already have fair banking rules designed to prevent discrimination based on age, gender, marital status, nationality, race, religion, etc. However, these rules do not restrict banks (or their regulators) from arbitrarily denying or revoking someone’s access to banking services.
Thus, debanking can become a tool—or weapon—used systematically by certain political actors/institutions against private individuals or industries, without due process. Imagine if the government could decide who gets access to electricity based solely on political views or arbitrary reasons—with no explanation, investigation, notification, or remedy. That is exactly what debanking represents.
Why are people debanked?
Not all account closures constitute “debanking.” Banks may close customer accounts for various reasons, including suspicion of illicit activity. Banks may also proactively reduce exposure to certain individuals, industries, or business models to minimize regulatory compliance costs and administrative burdens.
However, such legitimate practices aren’t the root of growing concerns around debanking. Instead, many worries stem from reports of regulators improperly wielding power—exerting undue influence over banks to drop clients in certain industries or those associated with politically disfavored groups or ideologies. This enables regulators to exert control over sectors despite lacking explicit congressional authorization.
Banks often comply silently, unwilling to confront regulators. Many also wish to avoid additional scrutiny or audits from banking supervisors should they resist such pressure.
Where did “Operation Choke Point” come from?
In 2013, the U.S. Department of Justice was found to have launched a fraud and anti-money laundering initiative targeting certain businesses—a policy move by the President’s Financial Fraud Enforcement Task Force. This marked a strategic shift: instead of focusing on individual corporate misconduct, the government began issuing subpoenas to banks and payment processors demanding information about customers engaged in high-risk or politically unfavored—but legal—businesses.
In essence, the government used regulation to unjustly “cut off” financial services and close accounts, aiming to strangle enterprises in industries it opposed (a point noted at the time by the head of the American Bankers Association, the U.S. banking trade group). In 2014, Frank Keating (former CEO and president of the American Bankers Association, former governor of Oklahoma, and honorary chairman of the Bipartisan Policy Center in Washington) wrote in a Wall Street Journal op-ed:
"When you become a banker, no one gives you a badge or judicial robes. So why is the Department of Justice telling bankers to act like police officers and judges? The DOJ’s new investigation, called 'Operation Choke Point,' demands that banks identify customers who may be breaking the law—or merely doing things that government officials dislike."
Due to strong opposition from lawmakers, financial institutions, and civil society, the program was officially shut down the following year.
Today, the term “Operation Choke Point 2.0” is sometimes used to describe government efforts to cut off banking access for “political enemies and unwanted tech startups.” Or, in others’ words, it describes banks severing ties with clients perceived as politically incorrect, extreme, dangerous, or crossing invisible lines. Regardless of definition, it affects entities across the entire political spectrum.
Which institutions are involved?
The inner workings of “Operation Choke Point”—and any similar or subsequent systemic attempts to deny banking services to specific entities or industries—were previously unknown, as investigations (if any) were conducted privately and Freedom of Information Act (FOIA) requests remained pending. However, on December 6, court filings in one such FOIA case revealed that the Federal Deposit Insurance Corporation (FDIC) instructed at least one bank (in a letter dated March 11, 2022): “...At present, the FDIC has not identified any regulatory filing requirements (if any) for banks engaging in such activities. Therefore, we respectfully request that you suspend all activities related to crypto assets.” Numerous FDIC letters were submitted as exhibits in the case record.
We also know that the original Financial Fraud Enforcement Task Force behind “Operation Choke Point 1.0” (2013) included agencies such as the FDIC and the Department of Justice (DOJ). The Office of the Comptroller of the Currency (OCC)—an independent bureau within the U.S. Treasury—was clearly involved, as was the central bank, the Federal Reserve Board (FRB). The Consumer Financial Protection Bureau (CFPB) has also been implicated.
Note: The U.S. government is not the only one employing debanking policies. Other governments, such as Canada, have used similar tactics; the UK has had to investigate complaints regarding state-led debanking initiatives.
Why does the government do this, and what are the effects?
Reasons given for debanking vary—from combating payment processor fraud to preventing high-risk businesses from operating due to potential links to money laundering. These justifications are often framed as “de-risking,” rather than “debanking”: “the practice by which financial institutions indiscriminately terminate or restrict business relationships with entire categories of customers, rather than conducting targeted risk analysis and management.”
More broadly, both de-risking and debanking can function as partisan tools—smothering legitimate businesses purely for political reasons. Another possible motive is that certain government agencies seek greater discretion and authority over decisions about “where and under what conditions consumers can access loans, financial products, and other banking services.”
To be clear, the issue isn't about whether a particular agency fulfills its duties. The problem lies in excessive government interference—or outright abuse of power—against lawful enterprises, carried out without meaningful due process or accountability, often behind closed doors. Especially because sufficient laws and legal mechanisms already exist to regulate businesses for valid reasons, such as consumer protection, anti-money laundering, and crime prevention.
Using debanking strategies leads to numerous unintended consequences. Even when intended to protect consumers and the banking system, the outcomes can backfire—limiting consumer choice or creating a chilling effect across commerce. These practices also undermine the U.S. government’s own policy goals, as highlighted in the U.S. Treasury’s 2023 report on de-risking:
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Pushing financial activity outside the regulated financial system;
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Hindering remittances or delaying the smooth transfer of international development and humanitarian/disaster relief funds;
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Impeding low- and middle-income populations and other underserved communities from effectively accessing the financial system;
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Undermining the centrality of the U.S. financial system.
Finally, debanking may punish legitimate businesses and individuals through guilt by association. For example, someone might have an approved mortgage revoked simply because they work at an open-source foundation in the crypto industry.
For all these reasons, many describe debanking as “un-American.” When debanking indiscriminately targets emerging technologies, it is unquestionably anti-innovation.
How widespread is debanking?
While we cannot speak for the entire industry or specific interests, as a venture capital firm focused on crypto, we have personally observed at least 30 instances of debanking affecting our portfolio companies and founders over the past four years. Coinbase has also publicly stated it has identified at least “20 examples where the FDIC asked banks to ‘pause,’ ‘stop providing,’ or ‘not continue’ crypto banking services.”
There are likely many more such cases. Many entrepreneurs and small businesses remain silent due to fear of further retaliation or lack of resources to fight back—so the issue remains underreported.
Among our portfolio companies, many affected by debanking are unprofitable and have not issued tokens. Their accounts received venture capital funding (channeled through institutional investors like pension funds and university endowments), which they used for payroll and routine operational expenses—just like any other tech startup.
So what reasons were given—either in writing or (more commonly) verbally? Reasons cited include “we don’t offer cryptocurrency banking services,” but more frequently: “your account has been closed due to compliance-related issues. Please transfer all funds immediately.” Companies were told this, yet never informed which specific “compliance” issue existed, nor given any opportunity to correct it. Additional reports we’ve received from companies include:
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Told that “the compliance backend team shut down the account and banned us from opening any other accounts. No further reason was provided, and there is no appeals process”;
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Denied service due to “lack of trust toward anyone running a crypto company”;
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Receiving baseless inquiry letters and notices, creating costly cycles and unnecessary stress—for startups whose operations are already lean compared to large corporations.
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