We can't live in a world where someone starts a company that is completely legal and then literally () is sanctioned () and seized by the United States government through a completely inexplicable (process), by the way. Without due process. None of this is written. There are no rules. There is no court, there is no decision process. There is no appeal. Who are you appealing to, right? () Who do you go to to recover your bank account?
—Marc Andreessen, <a target="_blank" href="https://x.com/benaverbook/status/1861511171951542552″>talking to joe roganpublished on 11/26/2024
In yet another troubling manifestation of “Chokepoint 2.0,” a Wyoming company was summarily debanked in early November 2024 by Mercurya banking platform operated with Evolve Bank (and other banking partners). After years of smooth operations and exemplary service, Mercury abruptly terminated the account without clear cause. The excuse? A vague nod to “internal factors” that remain as opaque as the regulatory pressures likely behind them.
Let's be clear: the company's banking activity was not controversial. The only potential crime is that the company accepts a significant portion of its customers' payments in bitcoin. In addition to monthly transfers from Kraken (a regulated crypto exchange), their transactions included rent, utility payments, hardware store purchases, and subcontractor invoices.
The dismissal could not have had anything to do with risky behavior or financial misconduct. Instead, the shutdown is emblematic of a systemic effort to hamper bitcoin businesses by exploiting centralized banking choke points that regulators have turned into tools of repression.
This is Chokepoint 2.0 in action. Regulators have found new ways to crack down on industries they don't favor, this time targeting bitcoin miners and companies. Instead of legislative debate or due process, unelected bureaucrats leverage their oversight of banks to push them to “de-risk” customers who engage in entirely 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, where federal regulators illegally pressured banks to cut off services to legal but disadvantaged industries such as firearms dealers and payday lenders. that campaign ended in disgrace when the FDIC was forced to settle a lawsuit in 2019. The agreement stated what should have been obvious: using the financial system as a weapon against legal businesses is unconstitutional. Regulators know this, and yet here we are again.
Why this matters
Going unbanked is not just an inconvenience. For companies, it is existential. Trading without a trusted 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 industry is at your own risk. It also stifles innovation, a dangerous precedent for a country founded on economic freedom.
Furthermore, this practice undermines the fundamental principle of fairness in financial services. The American banking system is not a private fiefdom. It operates under public charter and with public trust, and its guardians should not act as arbiters of political or ideological purity.
The damage extends beyond bitcoin. If regulators can strangle this industry, what's stopping them from targeting others? What happens when innovation, dissent, or inconvenient truths are deemed “too risky” for the comfort of entrenched powers? This is about more than just bitcoin: it is about the integrity of the financial system and the preservation of free markets.
A call to action: responsibility of regulators
The new Congress and the Trump administration must seize this moment to hold the architects of Chokepoint 2.0 accountable. This is not a partisan issue; It is constitutional. Regulators who act as de facto legislators, imposing policies that would never survive public scrutiny, must be reined in.
- Investigations into regulatory overreach
Congress should launch thorough investigations into agencies pressuring banks to sever ties with bitcoin companies. Who issued these directives? Under what authority? The American people deserve answers and the offending parties deserve consequences.
- Personal liability of regulators
Bureaucrats who abuse their power should not be protected by the anonymity of the regulatory machinery. Those responsible for weaponizing the financial system against legal businesses should be named, shamed, and removed from office, permanently lose any security clearances they may have, and potentially lose their pensions and government retirement benefits.
- Restoration of due process
Any decision to restrict access to banking should require clear, codified standards and a transparent appeals process. No more shadow rules. If a company is to be debanked, the reasons must be public, defensible, clearly articulated and defined, based on law and appealable.
- Legislation to protect financial access
Congress should pass laws prohibiting banks from discriminating against legal industries for political or ideological reasons. The free market thrives on neutrality; withers under prejudice.
- Decentralization of financial systems
bitcoin exists as a protection against precisely this type of overreach. Authorities should embrace and encourage its growth, not fight it. The United States cannot afford to be left behind in the global race for financial innovation.
Much of the above could be addressed by Section 10 of the SAFER Banking Actwhich directly limits undue regulatory influence over banking services. Specifically, it prohibits federal banking agencies from pressuring financial institutions to end their relationships with legal companies, including those in the bitcoin and cryptocurrency industry, 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 general biases against entire industries. By codifying such protections, the SAFER Banking Act would promote fairness and transparency in financial services, ensuring that regulators fulfill their duties of impartial oversight while respecting the rights of businesses operating legally under state or federal law. .
In addition to legislative solutions, the presence of even one bank with the will and ability to resist undue regulatory pressure could dramatically reshape the financial landscape for bitcoin companies. <a target="_blank" href="https://x.com/CaitlinLong_”>Caitlin Long bank custodianbased in Wyoming, exemplifies this potential. Custodia has consistently demonstrated its commitment to operating within the law while challenging the overreach of federal regulators. as seen in his lawsuit against the Federal Reserve.
A bank with this level of determination, direct access to the Federal Reserve itself, and a proven track record of standing up to regulators will provide a lifeline for bitcoin (and other) companies looking for reliable financial services. By fostering an ecosystem where legal businesses can thrive without fear of arbitrary debanking, Custodia Bank offers a model for how other institutions could follow suit, ensuring that innovation and economic freedom remain protected.1
Together, the SAFER Banking Act and the perseverance of institutions like Custodia Bank represent two critical fronts in the fight against financial discrimination. While the SAFER Act provides a legislative framework to reduce regulatory overreach and protect legal businesses from underbanking, it has faced significant resistance, having been introduced several times in Congress only to be repeatedly blocked. Meanwhile, Custodia Bank's struggle underscores 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-rooted opposition to reform, but also emphasize the urgent need for a multifaceted strategy (legislative, judicial and business) to ensure fair and impartial access to banking services for all legal businesses.
Bitcoiners: the front line of freedom
bitcoin is not just money; It is an idea, an idea that money and power belong to the people, not the State. That's why we are here. That's why bitcoin exists. The legacy financial system is crumbling under its own corruption, and each act of repression only underscores the need for decentralized alternatives.
To be clear, I don't completely Blame Mercurio and Evolve for this. Their regulators will likely force them to do so.2 In fact, due to the Orwellian Law of Bank Secrecy, banks are not allowed disclose the reasons for these matters to affected customers. Banks like Mercury and any others that willingly cooperated with Chokepoint 2.0 should be subject to congressional subpoenas to explain themselves and also name and shame the regulators who co-opted them.
The future of bitcoin (and the United States' role as an innovation leader) depends on exposing and dismantling Chokepoint 2.0 and holding accountable all those who participated in it.
1 Of course, Custodia Bank having a master account does not eliminate the possibility of government censorship, but it does force it to be direct and open, rather than the indirect, hidden and unappealable route that regulators can now take. See <a target="_blank" href="https://x.com/caitlinlong_/status/1862177094626676855?s=46″>this post x by Caitlin Long.
2 Another reason to believe that, in the case of Mercury and Evolve, regulators are responsible, is that Evolve Bank was penalized in June 2024 by the Federal Reserve, and likely forced to take these actions by its over-the-top and over-the-top regulators as part of that sanction. .
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.
