what was operation chokepoint, and explain what the Biden administration did to do cripple Bitcoin
Operation Choke Point (Original, 2013)
Operation Choke Point was a U.S. Department of Justice initiative launched in 2013 during the Obama administration. It aimed to combat fraud and money laundering by pressuring banks to sever ties with businesses deemed “high-risk,” such as payday lenders, firearm dealers, and certain online merchants. Regulators used informal guidance and reputational risk warnings to discourage banks from servicing these industries, often without formal legal action. Critics, including lawmakers, later condemned it as regulatory overreach, arguing it targeted legal businesses without due process. The operation was officially ended in 2017 following congressional investigations and lawsuits, with the FDIC pledging to avoid informal pressures on banks.
Operation Choke Point 2.0 (Alleged, Biden Administration)
“Operation Choke Point 2.0” is a term coined by crypto advocates, notably Nic Carter, to describe alleged coordinated efforts by the Biden administration to restrict the cryptocurrency industry, particularly Bitcoin, by limiting its access to banking services. While U.S. officials, including SEC Chair Gary Gensler, denied a formal crackdown, critics point to several actions as evidence of a deliberate strategy to “debank” crypto firms. Below are the key actions associated with this claim:
- Regulatory Guidance and Warnings (January 2023)
On January 3, 2023, the Federal Reserve, FDIC, and Office of the Comptroller of the Currency (OCC) issued a “Joint Statement on Crypto-Asset Risks to Banking Organizations.” It highlighted volatility and vulnerabilities in the crypto sector, warning banks of risks associated with servicing crypto firms. This guidance was interpreted as discouraging banks from engaging with the industry, creating a chilling effect. - White House Roadmap (January 2023)
On January 27, 2023, the White House released a “Roadmap to Mitigate Cryptocurrencies’ Risks,” framing cryptocurrencies as a potential threat to financial stability. It opposed legislation that would integrate crypto into mainstream finance, such as allowing pension funds to invest in digital assets, and emphasized protecting investors and holding “bad actors” accountable. Critics argued this signaled an anti-crypto stance, discouraging financial institutions from supporting Bitcoin and other cryptocurrencies. - Proposed Digital Asset Mining Energy (DAME) Tax (May 2023)
The Biden administration proposed a 30% excise tax on electricity used by cryptocurrency mining operations, citing environmental and economic costs. Bitcoin mining, which relies on energy-intensive processes, was a primary target. Industry leaders, like Brian Morgenstern of Riot Platforms, viewed this as an attempt to hinder Bitcoin’s growth by increasing operational costs, effectively “unplugging” miners from the energy grid. - Debanking and Bank Closures (2022–2023)
Several crypto-friendly banks faced scrutiny or closure, which critics attributed to regulatory pressure:- Silvergate Bank announced voluntary liquidation in March 2023, citing regulatory challenges and market conditions.
- Signature Bank was shut down by New York regulators in March 2023, with former board member Barney Frank claiming it was targeted to send an “anti-crypto” message, despite no insolvency issues.
- Metropolitan Commercial Bank closed its crypto business, and Signature Bank reduced crypto-related deposits, reportedly under regulatory pressure.
These closures limited crypto firms’ access to fiat on- and off-ramps, critical for converting Bitcoin to traditional currency. Coinbase CEO Brian Armstrong and others reported over 30 tech and crypto firms, including Uniswap Labs, being debanked without notice.
- FDIC’s “Pause Letters” and Reputational Risk
Documents obtained via Freedom of Information Act requests by Coinbase revealed FDIC “pause letters” urging banks to halt crypto-related activities, such as Bitcoin transactions or stablecoin issuance, citing “reputational risk.” These informal directives bypassed formal rulemaking, raising concerns about due process violations. The FDIC’s lack of transparency, as noted by Coinbase’s Paul Grewal, fueled allegations of a covert campaign. - Broader Regulatory Actions
The SEC, under Gary Gensler, pursued enforcement actions against crypto exchanges like Kraken (for staking services) and Paxos, labeling certain crypto products as securities. While not exclusive to Bitcoin, these actions contributed to a perception of hostility toward the industry. A White House report by the Council of Economic Advisers further criticized crypto, reinforcing the administration’s negative stance.
Impact on Bitcoin
These actions collectively aimed to isolate Bitcoin from the traditional financial system:
- Banking Access: Debanking restricted Bitcoin firms’ ability to operate, limiting liquidity and user access to exchanges.
- Mining Costs: The proposed DAME tax threatened to make U.S.-based Bitcoin mining unprofitable, potentially pushing operations overseas.
- Market Perception: Regulatory warnings and bank closures signaled to investors and institutions that Bitcoin was risky, potentially stifling adoption.
Critics, including Senator Bill Hagerty, argued that regulators falsely framed crypto businesses as primarily illicit, ignoring their potential for innovation.
Counterarguments and Context
Some argue that these actions were not a coordinated conspiracy but a response to legitimate concerns:
- The 2022 collapse of FTX and other crypto failures highlighted risks, prompting regulators to protect financial stability.
- Banks’ caution toward crypto may reflect independent risk assessments, not just regulatory pressure.
- Federal Reserve Chairman Jerome Powell acknowledged complaints about debanking but denied systemic discrimination, suggesting further investigation was needed. However, the volume of anecdotes and FDIC documents suggest at least some targeted pressure, even if not formally orchestrated.
Current Status
With the transition to the Trump administration in 2025, there’s optimism in the crypto industry for policy reform. Congressional hearings in February 2025, led by the House Financial Services Committee, are investigating Operation Choke Point 2.0, with testimony from crypto executives. The OCC has updated guidelines to grant banks more autonomy in serving crypto firms, and figures like Trump and David Sacks have vowed to end these practices.
Conclusion
Operation Choke Point 2.0 refers to alleged Biden administration efforts to cripple Bitcoin and crypto through regulatory guidance, debanking, and targeted taxes. While no definitive “smoking gun” proves a conspiracy, actions like FDIC pause letters, bank closures, and the DAME tax proposal significantly disrupted the industry. These measures limited Bitcoin’s integration into mainstream finance, though their long-term impact may be mitigated by shifting political priorities.
How does the future look under the Trump administration?
The future of Bitcoin and the broader cryptocurrency industry under the Trump administration, starting January 20, 2025, appears poised for significant shifts based on actions already taken and promised policies. Below is an analysis of the potential trajectory, grounded in recent developments, executive actions, and sentiment from the crypto industry, while critically examining the implications.
Key Developments and Policies Under Trump
- Pro-Crypto Executive Orders
- On January 23, 2025, Trump signed an executive order to promote the growth of digital assets, establishing a President’s Working Group on Digital Asset Markets, chaired by venture capitalist David Sacks, Trump’s “Crypto and AI Czar.” This group, including leaders from the SEC, CFTC, Treasury, and other agencies, is tasked with proposing a comprehensive regulatory framework within 180 days and exploring a national digital asset stockpile.
- On March 6, 2025, Trump signed another executive order creating a Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile, centralizing the management of cryptocurrencies seized by federal agencies (e.g., the U.S. holds ~200,000 Bitcoin). This move aims to position Bitcoin as a “digital gold” store of value, with Trump criticizing past sales of seized Bitcoin as costing taxpayers $17 billion.
- The orders explicitly ban central bank digital currencies (CBDCs) in the U.S., aligning with Trump’s preference for decentralized cryptocurrencies over government-controlled digital money.
- Strategic Bitcoin Reserve
- Announced on March 2, 2025, the reserve will include Bitcoin, Ethereum, XRP, Solana, and Cardano, with Bitcoin and Ethereum at its core. This announcement spiked Bitcoin’s price by over 11% to $94,164 and boosted the total crypto market by $300 billion.
- The reserve could stabilize crypto prices by reducing volatility if the U.S. holds a significant portion of global tokens. It may also legitimize Bitcoin as a national asset, similar to gold, encouraging other nations to follow suit (e.g., Switzerland, Brazil, and Germany are considering crypto reserves).
- Critics, like Cornell professor Eswar Prasad, note that unlike gold, Bitcoin lacks intrinsic value, and U.S. dominance in the market could amplify volatility risks.
- Regulatory Overhaul
- Trump’s SEC chair nominee, Paul Atkins, a former commissioner with a pro-innovation stance, is expected to shift away from the Biden-era “regulation by enforcement” under Gary Gensler. Atkins may prioritize clear rules, potentially classifying cryptocurrencies like Bitcoin as commodities under the CFTC rather than securities under the SEC, reducing regulatory burdens.
- The SEC has already paused investigations into companies like Coinbase and dropped lawsuits, signaling a lighter touch. A new Crypto 2.0 task force and the Working Group are expected to provide industry feedback-driven regulations.
- The Justice Department, under Deputy Attorney General Todd Blanche, dismantled the National Cryptocurrency Enforcement Team (NCET) in April 2025, ending probes into firms like Binance and Robinhood. Prosecutors are now directed to avoid charging regulatory violations, focusing instead on cartels and criminal networks using crypto.
- Support for Crypto Industry
- Trump’s first-ever White House Crypto Summit on March 7, 2025, hosted industry leaders, reinforcing his campaign promise to make the U.S. the “crypto capital of the world.”
- The administration pardoned BitMEX founders in 2025 for prior money laundering charges, further signaling a crypto-friendly stance.
- Congressional allies, like Senator Tim Scott, are pushing to limit banks’ ability to “debank” crypto firms, addressing concerns from Operation Choke Point 2.0.
- Market Impact
- Bitcoin surged to $109,071 post-election, driven by optimism, and hit $100,000 again in May 2025 amid global trade deal hopes.
- Coinbase joined the S&P 500 in May 2025, a milestone for crypto’s mainstream acceptance.
- Institutional adoption is growing, with BlackRock launching a Bitcoin ETF in 2024 and hedge funds, banks, and sovereign wealth funds buying crypto.
Potential Future Outcomes
- Bullish Scenarios for Bitcoin
- Regulatory Clarity: A CFTC-led framework classifying Bitcoin as a commodity could reduce legal uncertainties, encouraging institutional investment. Experts like Agam Shah predict this will boost adoption by reducing risks for retail and institutional investors.
- Price Growth: Analysts like Standard Chartered’s Geoff Kendrick target Bitcoin at $500,000 by 2029, driven by the reserve, deregulation, and global adoption. Posts on X suggest bullish sentiment, with rumors of a 0% capital gains tax on crypto trading fueling speculation.
- Global Leadership: The U.S. could set international crypto standards, leveraging its 200,000 Bitcoin holdings and reserve to influence global markets.
- Innovation Boost: Deregulation and pro-crypto policies may spur blockchain innovation, with stablecoins gaining traction as a medium of exchange.
- Risks and Challenges
- Conflicts of Interest: Trump and his family’s involvement in World Liberty Financial (WLF), holding 22.5 billion $WLF tokens and 75% of proceeds, raises ethical concerns. Critics, including Democrats and watchdogs, warn that Trump’s policies could inflate his personal crypto ventures, with foreign buyers potentially buying influence via $TRUMP memecoins.
- Volatility and Fraud: Critics like Dennis Kelleher of Better Markets warn that deregulation could lead to a 2008-style financial crisis, given crypto’s volatility and history of scams (e.g., FTX). Stablecoins are increasingly used for money laundering, with $2.4 billion in illicit drug sales in 2024.
- Environmental Concerns: Bitcoin mining’s energy consumption, targeted by Biden’s proposed DAME tax, remains a challenge. Deregulation could exacerbate environmental and noise pollution issues.
- Regulatory Delays: Despite optimism, crafting a comprehensive framework may take months or years, and legal precedents may slow Atkins’ reforms.
- Critical Perspective
- The narrative of a crypto-friendly Trump administration must be scrutinized. While deregulation benefits the industry, the lack of oversight could enable fraud, as seen in past scandals. The Justice Department’s shift away from regulatory enforcement may prioritize political optics over investor protection.
- Trump’s pivot from calling Bitcoin a “scam” in 2021 to a “crypto president” aligns with campaign donations ($100 million from crypto Super PACs) and personal financial interests, suggesting self-interest over ideological commitment.
- The Strategic Bitcoin Reserve, while innovative, risks tying national financial strategy to a volatile asset, potentially exposing taxpayers to losses if prices crash.
Conclusion
Under the Trump administration, Bitcoin and cryptocurrencies are likely to experience a bullish phase driven by deregulation, a Strategic Bitcoin Reserve, and institutional adoption. Policies like the Working Group, SEC reforms, and anti-debanking measures address grievances from Operation Choke Point 2.0, fostering growth. However, risks of conflicts of interest, fraud, and environmental impacts loom large. While the U.S. aims to become the “crypto capital,” balancing innovation with investor protection will be critical. The next 180 days, as the Working Group drafts regulations, will shape whether this vision delivers prosperity or repeats past financial missteps.
Note: Posts on X mentioning a 0% capital gains tax on crypto are unverified rumors and should be treated as speculative. Always verify such claims through official sources. For updates, monitor announcements from the White House or SEC at www.whitehouse.gov or www.sec.gov.[](https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-president-donald-j-trump-establishes-the-strategic-bitcoin-reserve-and-u-s-digital-asset-stockpile/)[](https://www.reuters.com/world/us/trumps-new-sec-leadership-poised-kick-start-crypto-overhaul-sources-say-2025-01-15/) (http://www.sec.gov.[](https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-president-donald-j-trump-establishes-the-strategic-bitcoin-reserve-and-u-s-digital-asset-stockpile/)[](https://www.reuters.com/world/us/trumps-new-sec-leadership-poised-kick-start-crypto-overhaul-sources-say-2025-01-15/))