David Sacks, the White House crypto czar, celebrated a big victory today. He announced that the Federal Deposit Insurance Corporation (FDIC) is following the U.S. Office of the Comptroller of the Currency (OCC) in removing “reputational risk” as a factor in bank supervision. This change effectively rolls back the controversial Operation Chokepoint 2.0 policies, which had led to the unfair debanking of crypto companies.
Sacks said that this is a big step forward for crypto. Operation Chokepoint 2.0, which was supported by figures like Senator Elizabeth Warren, used vague criteria like “reputational risk” to target crypto businesses. This meant that institutions could be punished for negative publicity, whether true or not. The new policy change will make banking criteria more objective and fair, preventing political influence from hurting the crypto sector.
Sacks also credited Senator Tim Scott for his leadership in pushing these changes, especially through the Financial Institution Reform and Modernization (FIRM) Act. This move is expected to create a better environment for crypto businesses and could lead to higher prices for digital assets in the future.
Fox Business’ Eleanor Terrett added more context, explaining why “regulation by enforcement” doesn’t work. She explained that Ripple has spent between $150 million and $200 million in legal fees over the years, only to end up in the same position it was in when the SEC first filed the lawsuit in 2020. The SEC likely spent taxpayer dollars as well.
Here’s why regulation by enforcement is the least effective way to achieve regulatory clarity:
Including the fine, @Ripple has shelled out somewhere between $150M – $200M in legal fees only to end up in more or less the same position it was in when the @SECGov brought the… https://t.co/7QUOM21XYR
— Eleanor Terrett (@EleanorTerrett) March 25, 2025
XRP holders were also negatively impacted, as exchanges removed the token, causing its value to drop. Many other crypto projects also became hesitant to build in the U.S. for fear of being targeted by the SEC. Terrett criticized SEC Chair Gary Gensler for focusing resources on crypto firms while missing major issues like FTX, 3AC, and Celsius, which caused real harm to investors.
