We can’t live in a world where someone starts a business that’s completely legal, and then gets literally () sanctioned () and embargoed by the US government, through a completely inexplicable (process) by the way. Not a fair trial. None of this is written down. There are no rules. There is no court, there is no decision-making process. There is no appeal. Who are you appealing to, right? () Who do you go to to get your bank account back?
—Marc Andreessen, in conversation with Joe Roganpublished on 26-11-2024
In yet another disturbing manifestation of “Chokepoint 2.0,” a Wyoming company was summarily bankrupted in early November 2024 by Mercurya banking platform that collaborates with Evolve bank (and other banking partners). After years of trouble-free operations and exemplary service, Mercury abruptly terminated the account for no apparent reason. The excuse? A vague nod to ‘internal factors’ that remain just as opaque as the regulatory burden that is probably behind them.
Let’s be clear: the company’s banking activities were uncontroversial. The only possible violation is that the company accepts a significant portion of its customer payments in Bitcoin. Aside from monthly payments from Kraken (a regulated crypto exchange), the transactions include rent, utilities, hardware store purchases, and subcontractor invoices.
The termination may not have had anything to do with risky behavior or financial misconduct. Instead, the shutdown is emblematic of a systemic effort to hobble Bitcoin businesses by exploiting the centralized bottlenecks in banks that regulators have turned into tools of oppression.
This is Chokepoint 2.0 in action. Regulators have found new ways to suppress industries they deem unfavorable – this time they are targeting Bitcoin miners and companies. Instead of legislative debate or due process, unelected bureaucrats use their oversight of banks to push them to reduce the risks of clients engaged in fully legal activities. The company was simply collateral damage in the campaign to isolate Bitcoin from the traditional financial system.
This is a chilling echo of Operation Chokepoint 1.0, in which federal regulators illegally pressured banks to stop serving legitimate but disadvantaged industries such as firearms dealers and lenders. That campaign ended in infamy when the FDIC had to settle a lawsuit in 2019. The settlement confirmed what should have been obvious: weaponizing the financial system against legitimate businesses is unconstitutional. Regulators know this – and yet here we are again.
Why this matters
Debanking is not just an inconvenience. It is existential for companies. Working without a reliable banking partner in today’s economy is like trying to breathe without air. When banks are forced to cut ties with Bitcoin-related companies, it sends a chilling message: participating in this sector is at your own risk. It also stifles innovation, a dangerous precedent for a country founded on economic freedom.
Furthermore, this practice undermines the core principle of fairness in the financial services industry. The American banking system is not a private fiefdom. It operates under public charters and with public trust, and its gatekeepers are not allowed to act as arbiters of political or ideological purity.
The damage extends beyond Bitcoin. If regulators can slow down this sector, what’s to stop them from targeting others? What happens when innovation, dissent, or uncomfortable truths are deemed “too risky” for the comfort of entrenched powers? This is about more than Bitcoin: it’s about the integrity of the financial system and the preservation of free markets.
A call to action: accountability for regulators
The new congressional and Trump administration must seize this moment to hold the architects of Chokepoint 2.0 accountable. This is not a partisan issue; it is a constitutional problem. Regulators who act as de facto legislators and impose policies that would never survive public scrutiny must be kept in check.
- Investigating regulatory overreach
Congress must conduct extensive investigations into the agencies pressuring banks to cut ties with Bitcoin companies. Who issued these guidelines? Under what authority? The American people deserve answers, and the offending parties deserve consequences.
- Personal responsibility for supervisors
Bureaucrats who abuse their power should not be protected by the anonymity of the regulatory apparatus. Those responsible for weaponizing the financial system against legitimate businesses should be named, shamed, and removed from their positions, permanently lose any security clearances they have, and possibly lose their government pensions and retirement benefits.
- Restoration of due process
Any decision to restrict access to banks should require clear, codified standards and a transparent appeals process. No more shadow rules. If a company is debanked, the reasons must be public, defensible, clearly articulated and defined, founded in law and subject to appeal.
- Legislation to protect financial access
Congress should pass laws prohibiting banks from discriminating against legitimate industries based on political or ideological reasons. The free market thrives on neutrality; it withers under prejudice.
- Decentralization of financial systems
Bitcoin exists as a hedge against exactly this type of overshoot. Policymakers should embrace and encourage its growth, not fight it. America cannot afford to fall behind in the global race for financial innovation.
Much of the above could be addressed via Section 10 of the SAFER Banking Actdirectly limiting unnecessary regulatory influence on banking services. It specifically prohibits federal banking agencies from pressuring financial institutions to terminate relationships with legitimate businesses, including those in the Bitcoin and cryptocurrency industries, based on reputational risks or political motivations. This provision reinforces the principle that decisions about financial services should be based on a risk-based analysis of individual accounts, rather than on general biases against entire sectors. By codifying such protections, the SAFER Banking Act would promote fairness and transparency in the financial services industry and ensure that regulators adhere to their duties of impartial oversight while respecting the rights of companies operating legally under state or federal law.
Beyond legislative solutions, the presence of even one bank with the willingness and ability to withstand unnecessary regulatory burdens could dramatically reshape the financial landscape for Bitcoin companies. Caitlin Longs Bank custodianlocated in Wyoming, is an example of this potential. Custodia has consistently demonstrated its commitment to operating within the law while challenging the overreach of federal regulators. as evidenced by the lawsuit against the Federal Reserve.
A bank with this level of resolve, direct access to the Federal Reserve itself, and a proven track record of resisting regulators will provide a lifeline for Bitcoin (and other) companies looking for reliable financial services. By fostering an ecosystem where legitimate businesses can thrive without fear of arbitrary debanking, Custodia Bank provides a model for how other institutions can follow suit, ensuring innovation and economic freedom remain protected.1
Taken together, the SAFER Banking Act and the perseverance of institutions like Custodia Bank represent two crucial fronts in the fight against financial discrimination. Although the SAFER Act provides a legislative framework to curb regulatory overreach and protect legitimate businesses from debanking, the law has faced significant resistance as it was introduced several times in Congress but repeatedly blocked. Meanwhile, Custodia Bank’s struggle underlines the severity of institutional hostility; The Federal Reserve’s refusal to grant Custodia access to the banking system forced the bank to file a federal lawsuit just to claim its rightful place in the financial ecosystem. These challenges highlight the deep-seated opposition to reform, but also highlight the urgent need for a multi-pronged strategy – legislative, legal and entrepreneurial – to ensure fair and impartial access to banking services for all legal businesses.
Bitcoiners: the frontlines of freedom
Bitcoin is not just money; it is an idea – an idea that money and power belong to the people, not to the state. This is why we are here. This is why Bitcoin exists. The old financial system is crumbling under its own corruption, and every act of repression only underlines the need for decentralized alternatives.
To be clear: I don’t do that complete blame Mercury and Evolve for this. They are probably forced to do so by their supervisors.2 As a result of the Orwellian Bank Secrecy Act, the banks have indeed gone bankrupt are not allowed to disclose the reasons for these matters to affected customers. Banks like Mercury, and all others who willingly collaborated on Chokepoint 2.0, should be subject to congressional subpoenas to explain themselves, as well as name and shame the regulators who co-opted them.
Bitcoin’s future—and America’s role as an innovation leader—depends on exposing and dismantling Chokepoint 2.0, and holding everyone who participated in it accountable.
1 Custodia Bank with a master account obviously does not have that eliminate the possibility of government censorship, but it does force it to be direct and open, rather than the indirect, hidden and unattractive route that regulators can now take. To see this x-post from Caitlin Long.
2 Another reason to believe that, in the case of Mercury and Evolve, the regulators are responsible is that Evolve Bank was sanctioned by the Federal Reserve in June 2024, and was likely forced into these actions by their overreaching and overreactive regulators as part of that punishment. .
This is a guest post by Colin Crossman. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.