Federal Reserve Opens Public Comment on Rule Targeting Operation Chokepoint 2.0

Highlights:

• The Federal Reserve moved to remove reputation risk from supervision tied to Operation Chokepoint 2.0.
• The proposal requires examiners to focus only on measurable financial risks.
• Lawmakers and crypto leaders say the rule could reduce future debanking cases.

The Federal Reserve on February 23 proposed a rule to remove “reputation risk” from its bank supervision standards. The proposal opens a 60-day public comment period. It directly addresses complaints tied to Operation Chokepoint 2.0. Under the proposal, examiners must focus only on material financial risks. Supervisors would review credit, liquidity, operational, and compliance exposure. They would no longer cite concerns about public image. Banks must base decisions on measurable financial factors.

The US Federal Reserve is soliciting feedback for 60 days on a proposal to potentially end Operation Chokepoint 2.0, which targets crypto debanking.

— @CryptoInvest_Mentor (@Crypto_InvestSH) February 24, 2026

The Fed first adjusted its approach in June last year. It told supervisors to stop pressuring banks over reputation concerns. That guidance limited informal supervisory pressure. The new proposal would formalize that position.

Vice Chair for Supervision Michelle Bowman described reports linked to Operation Chokepoint 2.0. She said, “We have heard troubling cases of debanking where supervisors use concerns about reputation risk to pressure financial institutions to debank customers because of their political views, religious beliefs, or involvement in lawful but disfavored businesses.”

She added that discrimination does not belong in the Federal Reserve’s supervisory framework. The Fed stated that it will review all submitted comments before finalizing the rule. Officials framed the change as a clarification of supervisory standards.

Crypto and Politics Put Operation Chokepoint 2.0 Back in Focus

The phrase Operation Chokepoint 2.0 has been applied by crypto executives to recent instances of debanking. They claim that reputation risk was used by regulators to affect bank relationships. Several digital asset companies announced the closure of their accounts. Others reported that banks refused to provide services without reference to financial infractions.

Senator Cynthia Lummis welcomed the Fed’s proposal. She said, “It’s not the Fed’s role to play both judge and jury for banking digital asset companies.” She called the step long overdue. Lummis has repeatedly challenged debanking practices tied to Operation Chokepoint 2.0 and vowed to end it.

https://t.co/MTyTPoxwFm

— Senator Cynthia Lummis (@SenLummis) February 23, 2026

Last year, JPMorgan closed accounts connected to Jack Mallers, the chief executive of Strike. Lummis questioned the justification for that action. She said banks must provide clear reasons for account terminations. Her office pressed regulators for answers. Meanwhile, the White House is preparing a motion to fine banks that cut their customers due to political reasons or crypto-related activities. Galaxy Digital’s head of research, Alex Thorn, also commented on the development. He wrote that the rollback of Operation Chokepoint 2.0 continues. His statement followed the Fed’s release of the proposal.

🚨 chokepoint 2.0 rollback continues

fed opens comments to finalize removal of “reputational risk” as a bank supervision vector before publishing final rule in the federal register within 60 days

my comment: YES pic.twitter.com/ZTbf6xbPiY

— Alex Thorn (@intangiblecoins) February 23, 2026

Political attention increased around other account closures. President Donald Trump filed a multibillion-dollar lawsuit against JPMorgan over terminated accounts. He alleged political motivation behind the decision. Court proceedings acknowledged that the bank closed his accounts after the January 6 events.

What Changes for Banks and Digital Asset Firms

The proposal would limit how examiners assess bank-client relationships. Supervisors must document financial risk. They cannot rely on subjective reputation judgments. Banks would apply clearer standards when reviewing lawful but controversial clients. Crypto firms have argued that reputation risk created uncertainty in banking access. The proposed rule addresses that complaint directly. However, the change is not final.

The Fed opened a 60-day comment window, where banks, industry groups, and lawmakers may submit feedback. Officials will review those submissions before issuing a final decision on the rule governing Operation Chokepoint 2.0.