Overview of Recent Findings
A recent preliminary report from the Office of the Comptroller of the Currency (OCC) has revealed troubling practices among the nine largest national banks. These institutions may have limited or outright refused services to clients operating in lawful sectors, particularly those dealing with digital assets. This action has triggered renewed discussions about the controversial Justice Department initiative known as “Operation Choke Point”, initiated in 2013, which aimed to categorize certain lawful industries, including those in cryptocurrency, as high-risk, effectively pressuring banks to avoid serving them.
Revival of Operation Choke Point
Although this initiative officially ceased in 2017, many in the cryptocurrency community have observed what they describe as a revival of these pressures, coining the term “Operation Choke Point 2.0”. They allege that federal regulators have subtly discouraged banks from engaging with crypto businesses. Documents from the Federal Deposit Insurance Corporation (FDIC) released earlier this year suggested internal skepticism regarding cryptocurrency operations, lending credence to these assertions.
Scope of Scrutiny
The scrutiny noted in the OCC’s review extended beyond crypto, also targeting businesses involved in:
- Oil and gas extraction
- Coal mining
- Firearms
- Private corrections facilities
- Tobacco and its alternatives
- Adult entertainment industry
The banks that were examined included heavyweight institutions such as JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, U.S. Bank, Capital One, PNC, TD Bank, and BMO.
Commitment to Accountability
OCC Comptroller Jonathan V. Gould stressed the commitment to halt any actions aimed at weaponizing financial services against legitimate business sectors, stating that the agency will hold banks accountable as further investigations progress.
It is important to note that these initial findings are part of a broader inquiry, with thousands of complaints still under consideration as the OCC seeks to determine if unlawful discrimination occurred against specific industries.
Positive Developments for Cryptocurrencies
On a more positive note, the OCC has recently started to adopt a more favorable stance towards cryptocurrencies. Last month, they issued an interpretive letter affirming that major banks are allowed to hold crypto assets on their balance sheets for paying network fees related to legitimately permissible banking activities. Furthermore, just last Tuesday, the regulator expanded its guidance, stating that banks are permitted to conduct “riskless principal transactions” involving cryptocurrencies.
