When the annals of twenty-first century finance are written, there will be a special (messy, political, and consequential) chapter devoted to the “bankruptcy” saga.
Over the past three years, anyone working in the cryptocurrency space, from Web 3 startups to regulated banks and exchanges like… Bank secretary Or Kraken, he knew all too well what it meant to be suddenly excluded from the American financial system. Sometimes, silent signals or vague “high-risk” assessments were enough. Other times, no explanation is given at all.
according to Data AIMA released in December 2024 that 98% of cryptocurrency-focused hedge funds facing bank account termination were never given a clear justification.
Dubbed “Choke Point Operation 2.0This latest crackdown parallels a previous government crackdown targeting politically unfavorable industries. This time, thousands of cryptocurrency companies and their partners (including hedge funds and payments companies) have seen their bank accounts terminated. They have found themselves restricted by risk officers or constrained by compliance teams fearful of regulatory backlash.
And just as the word “debanked” itself has become a kind of rallying cry, President Trump, whose family has been financially weaponized, One federal regulatory agency even officially acknowledged thistake quick and dramatic action. On August 7, 2025 Major Executive order He announced that regulators can no longer pressure banks to cut ties with legitimate companies. It was a long-overdue intervention and its effects are still rippling through back offices and bank boardrooms
But two months on, what progress has already been made since this? Have the banks really reopened and restarted the platforms that were wrongly taken down? How are pioneers like Custodia Bank tackling this refinancing landscape?
The era of Operation Choke Point 2.0
The backstory to President Trump’s bank break-up policy is long and controversial. During the Biden administration, a combination of public skepticism, regulatory overreach, and caution following high-profile crypto collapses (such as FTX, Celsius, and BlockFi) have conspired to push much of the industry to the financial sidelines. Companies were left scrambling for international alternatives or forced to operate in limbo
House and Senate hearings in early 2025, spurred by investigative work by figures like CoinMetrix founder Nick Carter, revealed a pattern: Cryptocurrency companies (even those with pristine compliance reputations) faced sudden and coordinated exclusion from any U.S. bank. Examiners merely indicated “high risk” labels or referred to unpublished lists of industries to avoid.
Despite public denials, internal FDIC and OCC documents now indicate deliberate and ongoing efforts to limit cryptocurrencies’ access to the banking system, validating what many have dismissed as an exaggerated “conspiracy theory.”
For those affected, the consequences were real. Caitlin LongFounder and CEO of Custodia Bank, described The result is stark:
“Operation Choke Point 2.0 has been devastating for the law-abiding US cryptocurrency industry, and Custodia Bank has been hit hard despite our strong track record in risk management and compliance.”
Business plans faltered. Salaries were frozen. Layoffs followed. Creativity retreated abroad or to shadow networks (which contradicts the declared American values of economic freedom and technological progress).
Ensuring fair banking services for all Americans
Fast forward to August 7, 2025. With criticism mounting and advocacy reaching fever pitch, President Trump signed the long-awaited executive order Titled “Ensuring fair banking services for all Americans.”
The text does not specifically mention “cryptocurrencies,” but instead prohibits “politicized or illegal banking,” which is the act of refusing banking services to any legal business, regardless of sector.
What makes this executive order different? In a smart, if unorthodox, move, Trump placed the Small Business Administration, historically the lender of last resort, above the Federal Reserve, the OCC, and the Federal Deposit Insurance Corporation (FDIC) as an independent supervisor of banking issues. Like Caitlin Notice:
“This is a huge signal — the White House doesn’t trust the three federal banking agencies (FDIC, Fed, and OCC) to clean their houses.”
The new head of the SBA, Kelly Loeffler, is a former senator, ex-CEO of Bakkt, and an open advocate for Bitcoin, indicating a clear intent to enforce this policy without the usual regulatory foot-dragging. As Caitlin assessed:
“It’s not just anyone in charge at the SBA — it’s Kelly Loeffler. She’s a Bitcoiner. Yes, the White House just gave *Bitcoin* this job 👇 (!!!).”
Caitlin noted that banks that refused to service legitimate cryptocurrency companies or closed accounts are now “on the hook” and will be held liable.
Much of the cryptocurrency community interpreted it as the eventual end of Choke Point 2.0. However, as is often the case, implementation on the ground is messier
Banks is navigating a new mandate
Big banks, lobbyists and compliance teams spent the late summer in a frenzy. Industry groups such as the Bank Policy Institute praised the administration:
“We thank the Administration for its efforts to protect access to banking and rein in unbridled regulations and look forward to working with the White House, Congress, and agencies to create a national standard that advances these goals.”
But internal practical challenges remain bulletin As of early October, he instructed banks to review Trump’s order, remind them of obligations under the Right to Financial Privacy Act and warn against arbitrary closure of accounts. However, the actual restoration of services to affected cryptocurrency companies has been slow.
Many banks, burned by past scandals, remain cautious, requiring companies to undergo extensive compliance audits or show years of spotless transaction records before reopening accounts. This is hardly the clean break many had hoped the executive order would provide. But it also reflects decades of entrenched regulatory caution
Caitlin Long and Custodia Bank
No bank is at the heart of the underbanked to rebanked transition like Custodia. Founded to bridge the gap between traditional banking and digital assets, Custodia has repeatedly gone bankrupt despite meeting compliance standards and receiving high scores from government regulators.
In 2022, the bank filed a lawsuit against the Federal Reserve after refusing to open a key account. Caitlin has become a fixture on Capitol Hill, championing “special purpose banks” that serve an industry built on transparency and risk control.
Referring to the 2024 donation data, she criticized the Federal Reserve for its biased stance towards companies operating in the cryptocurrency space, revealing that 92% Contributions from employees of these agencies in 2024 went to Democratic Party candidates. Caitlin believes this may have influenced bank break-up decisions under Biden.
While the new executive order theoretically makes room for Custodia, true “rebanking” is a work in progress. As Caitlin said:
“A good test to measure the success of this EO is whether or not the five banks that divested Custodia will reinstate us. Federal banking regulators have pressured several of them to divest from us despite our spotless compliance record – ‘because of cryptocurrencies.’ If they reinstate us, the EO has succeeded.”
Rethinking access: from exclusion to innovation
If we are any guide to history, top-down regulatory reforms do not immediately reverse a bottom-up risk culture. However, there is Signs Of real change.
Small and medium-sized banks, regional players, and a handful of indigenous Banking-as-a-Service (BaaS) providers are courting digital asset customers once again. They offer compliance setup services, transaction monitoring, and open-door policies that would have been unimaginable even six months ago.
On the other hand, the conversation is shifting from simple “access” to a deeper redefinition of financial rights. If a law firm can be denied service, regardless of its political or technological stripe, then economic freedom itself is at risk.
This links the battle over access to cryptocurrency banking to broader struggles facing cannabis, firearms, adult entertainment, and political advocacy groups. These are all groups that have been broken up in the past decade
Look: rebanked, but not relaxed
Where does the story go next? Trump’s executive order provides the sharpest legal tool yet for affected cryptocurrency companies to hold reluctant regulators and banks accountable. Appointing an independent supervisor outside traditional banking agencies is a signal that change is not optional but costly at the highest levels. To borrow from Caitlin:
“Potos is serious.”
However, until all companies whose accounts were wrongfully withdrawn can recover their accounts, it is the tension between financial freedom and risk aversion that will define digital asset innovation.
For the first time in years, there is real, if fragile, hope that access to the banking system will be determined not by politics, but by the rule of law, creativity, and due process.
