Washington is shifting its stance on cryptocurrency. After years of regulatory crackdowns, the federal government is reversing course, positioning the U.S. as a leader in digital asset innovation. The Trump administration and Republican-led Congress are actively working to undo policies that stifled industry growth under the Biden administration.
A key figure in this shift is Federal Reserve Chairman Jerome Powell. Previously, Fed regulators effectively cut off banking services for crypto companies. However, Powell recently stated the Fed does not take actions that force banks to terminate accounts for legal businesses due to regulatory pressure.
Despite these assurances, debanking happened. In response, former President Donald Trump issued an executive order prohibiting future regulatory actions like “Operation Choke Point,” which pressured banks to cut ties with crypto firms. Congress is also investigating the extent of debanking efforts during the previous administration.
Silvergate Bank, a key player in crypto banking, was among the hardest hit. For over a decade, it operated under regulatory oversight, serving digital asset businesses. But as the government’s stance hardened, regulators imposed measures that crippled banks catering to crypto, forcing Silvergate to wind down. Nearly 1,700 compliant crypto companies were left scrambling for banking services.
Silvergate was not alone. Signature Bank was similarly targeted. Former House Financial Services Chairman Barney Frank claimed regulators seized the bank in 2023 to send “a very strong anti-crypto message.” The FDIC later arranged for New York Community Bancorp to acquire Signature’s assets—except for $4 billion in crypto deposits, reinforcing concerns of regulatory bias.
The crackdown coincided with FTX’s collapse, which triggered a crisis of confidence in digital assets. Silvergate, despite being a victim of FTX’s fraud, successfully managed a $10 billion bank run. However, mounting regulatory pressure ultimately forced its closure. Court filings revealed Silvergate’s business model became “untenable” due to shifting regulatory demands, including reported caps on crypto deposits.
Even after winding down, Silvergate faced further scrutiny. Regulators fined the bank $63 million over alleged compliance deficiencies, amid political pressure from figures like Senator Elizabeth Warren. Despite this, Silvergate ensured full repayment to depositors, prioritizing customer protection in its liquidation.
With the Biden administration’s policies now under review, the future of crypto banking in the U.S. appears to be at a turning point. A more balanced approach could allow financial institutions to support crypto businesses without fear of government retaliation. If Washington follows through on its shift, the end of regulatory choke points could mark the beginning of a new era for digital finance.