House subcommittee hearing exposes dispute over whether regulators pressured banks to cut crypto firms off

The House Financial Services Subcommittee on Oversight and Investigations heard sharply divided testimony about an alleged regulatory campaign — referred to by some witnesses and members as “Operation Chokepoint 2” — that they say pressured banks to stop providing basic services to cryptocurrency companies.

The dispute played out across opening statements and witness testimony from Austin Campbell, Paul Grewal, Fred Teal and Shana Oleshuk, who described conflicting views of whether federal prudential regulators used supervisory letters, examinations and reputational pressure to push banks away from the digital-asset industry or whether regulators were responding appropriately to real financial and consumer risks.

Why this matters: Access to deposit accounts, payment services and credit are essential for ordinary business operations. Witnesses who said banks were pressured argued that denial of those services effectively prevented some digital-asset firms from operating in the United States. Other witnesses and Democratic members said the regulators’ stronger posture followed a period of high-profile crypto firm failures and large losses to consumers, and that stronger guardrails — not unfettered access — are needed.

Austin Campbell, introduced as acting CEO of WSPN USA and an adjunct professor at NYU Stern, told the…