OCC and FDIC finalize rule defining ‘unsafe practices’ to combat crypto debanking
OCC bank charter approvals, some tied to crypto firms, have increased during Trump's second term.
U.S banking regulators are racing to codify rules to prevent widely reported crypto debanking, commonly known as ‘Operation Chokepoint 2.0.’
On 27th August, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) jointly moved to finalize rules that define the term “unsafe or unsound practices” in bank supervision.
Speaking on the same, Head of the OCC Jonathan V. Gould said the move will help bank leaders to avoid distractions and focus on “material financial risks.”
Gould added that bank supervision should focus on substantive violations of law over concerns tied to policies, process, documentation, and other related enforcement standards. He concluded,
Today, the OCC is taking a number of historic steps to codify the agency’s return to risk-based supervision, helping to ensure that its more reasonable, intentional approach to bank supervision endures.
Why OCC, FDIC’s final rules matter to crypto
The final rules will effectively take effect 60 days after the guidelines appear in the Federal Register. For her part, former FOX Business reporter Eleanor Terrett billed the move as pro-crypto.
It marks another significant step toward unwinding “Operation Choke Point 2.0.
She added that the term “unsafe or unsound practices” has remained undefined for years and was left to the discretion of bank examiners.
In fact, during the Biden-era administration, the ambiguity of the term opened a leeway for regulators to enforce wide restrictions on crypto from the banking system. Banks were warned not to engage with firms or persons dealing with crypto assets or stablecoins in 2022. As a result, crypto firms, related fintechs, founders and clients were debanked.
The supervisory guidance was only rescinded in early 2025 after President Donald Trump assumed office.
The current administration has since instructed regulators to remove any barriers that limit crypto and fintech firms from participating in the U.S banking system.
As a result, Trump-era regulators have heeded the call, including the recent OCC-FDIC joint rule.
However, Jeremy Kress, Associate Professor of Business Law at the University of Michigan Ross, slammed the rule.
A terrible rule that exceeds the OCC’s/FDIC’s statutory authority, conflicts with established judicial precedent, and will undermine effective supervision. Should be rescinded expeditiously by the next administration.
The regulatory shift has been evident as the number of OCC bank charter approvals, including those tied to stablecoin issuers and crypto firms, soared during Trump’s second term. Now, will the next administration reverse the changes or not? That is a question only time will answer.
Final Summary
- OCC and FDIC are set to finalize rules to limit crypto de-banking by defining what practices can be deemed ‘unsafe or unsound’
- A legal analyst has called for the next administration to scrap the rule, calling it ‘terrible’ and anti-supervision of banks.
