Despite some superficially positive gestures, such as the immediate approval of the Ethereum ETF, the administration’s fundamental stance remains deeply antagonistic toward bitcoin and cryptocurrencies.

Scott Johnsson, a financial attorney at Van Buren Capital, has published an extensive critique via X detailing a series of harsh regulatory actions and policies (also known as Operation Chokepoint 2.0) by the Biden administration against the crypto sector.

Persistent Regulatory Actions Against Cryptocurrencies

Johnsson begins by addressing the Office of the Comptroller of the Currency’s (OCC) refusal to promulgate the “fair access” banking rule. This rule, championed by former Comptroller Brian Brooks, was intended to ensure that federally chartered banks could not deny financial services for political or ideological reasons.

The administration’s rejection of this rule exemplifies a broader reluctance to dismantle regulatory barriers that discriminate against crypto firms. This stance is further evidenced by numerous aggressive enforcement actions against major exchanges, including Coinbase, Binance and Kraken. All face enforcement actions based on what Johnsson calls an “unimaginably broad definition of security.”

These actions have unfolded without clear guidance from regulators, creating a climate of uncertainty and fear among cryptocurrency companies regarding potential legal action and broad securities law enforcement. The Securities and Exchange Commission (SEC) has been particularly active, issuing Wells Notices to several major players within the industry. This includes Consensys, Uniswap Labs and Paxos; the latter was forced to shut down the issuance of the stable coin BUSD.

Each of these actions illustrates the SEC’s willingness to use securities law in an unusually broad way against crypto entities, which could stifle innovation. In addition, Johnsson points to the SEC’s extension of the “dealer rule” to DeFi platforms, requiring them to register as exchanges and comply with Regulation ATS.

This move challenges the decentralized nature of these platforms and casts doubt on their ability to operate under the current regulatory framework without significant changes.

Legislative Maneuvering and IRS Overreach

A critical move by the Treasury Department was to insert definitions of “broker” into key legislation under the cover of night, with subsequent IRS regulations expanding those definitions to potentially encompass individuals and entities far beyond traditional brokers.

Johnsson also sheds light on the Department of Justice’s (DOJ) departure from established FinCEN guidance in its actions against Tornado Cash and Samourai Wallet, applying money transmission charges that carry serious legal consequences.

These decisions mark a significant shift in how U.S. law treats privacy-centric tools, and signal a potentially hostile environment for blockchain privacy innovation.

Banking and Institutional Barriers

The analysis continues with the Federal Deposit Insurance Corporation (FDIC) sending verbal messages to banks to maintain crypto deposit thresholds at 15 percent and requiring banks to seek individual approval for new crypto trading exposures.

Similarly, the Federal Reserve’s denial of Custody’s application for membership and refusal to grant a master account illustrates a concerted effort to limit the banking sector’s engagement with crypto companies.

In addition, the Federal Reserve, FDIC and OCC have issued joint statements highlighting the perceived risks that banks face when interacting with cryptocurrencies and discouraging them from maintaining direct exposures to cryptoassets.

Political and Legislative Resistance

The political landscape is no less challenging: 103 Democrats and two Republicans endorsed Senator Warren’s letter, which exaggerated the role of cryptocurrencies in terrorist financing and was not subsequently retracted.

Johnsson critically notes continued veto threats against legislative efforts such as SAB 121, which the Government Accountability Office (GAO) flagged for improper enactment, and highlights proposed legislation targeting cryptocurrency holders with onerous tax liabilities.

By Audy Castaneda