Wyoming Senator Cynthia Lummis, a pro-crypto United States lawmaker, recently expressed her support for Federal Reserve Governor Christopher Waller’s proposal to give crypto companies access to “skinny” master accounts. This proposal, announced at the Payments Innovation Conference in October, aims to provide crypto and fintech startups with access to accounts at the Federal Reserve, similar to those used by banks, but with certain restrictions. According to Lummis, this move would effectively end “Operation Chokepoint 2.0,” a coordinated effort to deny banking services to crypto companies and their founders.

Operation Chokepoint 2.0 has been described as a concerted effort to debank crypto companies, with over 30 tech founders reportedly affected. However, with the recent proposal from Governor Waller, there seems to be a regulatory shift in the US, with officials and lawmakers now embracing cryptocurrencies and other novel fintech startups as necessary upgrades to the payments system and the future of finance. Governor Waller delivers a speech at the Payments Innovation Conference. Source: Federal Reserve

Regulatory Shift and Debanking Issues

Despite the pro-crypto stance of the US government, crypto executives and project founders continue to report debanking issues. In August, US President Donald Trump signed an executive order prohibiting banks from debanking Americans and businesses without lawful cause. The order also instructed US banking regulators to identify banks and financial institutions that engaged in debanking and potentially impose fines or other punitive actions. However, debanking issues persist, with crypto companies and their founders facing challenges in accessing banking services.

For instance, Jack Mallers, the CEO of Bitcoin payments company Strike, reported being debanked by financial services company JPMorgan without explanation. Source: Jack Mallers. Similarly, stablecoin startup companies BlindPay and Kontigo had their bank accounts frozen by JP Morgan Chase, citing alleged exposure to sanctioned jurisdictions as the reason.

Impact on the Crypto Industry

The proposal from Governor Waller has been welcomed by the crypto industry, with many seeing it as a positive step towards greater regulatory clarity and access to banking services. According to Lummis, the “skinny” master account framework would “end Operation Chokepoint 2.0 and open the door to real payments innovation.” This move is expected to foster faster payments, lower costs, and better security, ultimately contributing to the growth and development of the crypto industry.

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