For years, banks in America and across the world have had crypto and Bitcoin in their crosshairs. But recently, the tide has been turning, as Hill sources noted to the Washington Reporter that Donald Trump Jr.’s sway in support of crypto, as well as that of others in Trump’s orbit is helping to turn the tide.
What happened in January 2023, when the Federal Reserve denied the application of Custodia Bank in Wyoming to become a member of the Federal Reserve System, was once the norm. The Fed, citing “novel and untested crypto activities,” refused to allow Custodia to become a member of the Federal Reserve System.
Banks’ hostility to crypto is nothing new — and is perhaps unsurprising. As recently as last year, bank CEOs referred to Bitcoin “itself [as] a hyped up fraud. A pet rock.”
John Czwartacki, the founder of Public Policy Solutions and a veteran of the Consumer Financial Protection Bureau (CFPB) from President Donald Trump’s first term, recently explained that “this isn’t the first time we have seen this dynamic at play.”
“In the 1970’s, ‘Ma Bell’ (AT&T corporation, before it was broken up) held a tight hold over the telecom industry and phone technology and wanted to solely focus on landlines,” Czwartacki noted. “Even as Motorola had developed the first hand-held mobile phone in 1973, AT&T used their power to slow development and strangle access to networks, leading to a decade in unnecessary delay before commercial mobile phones hit the markets and made lives easier. Today, Wall Street bankers are following in AT&T’s footsteps. Wall Street banks can’t be allowed to use regulatory capture to snuff out innovation on the vine. Consumer choice, breeding options so walled gardens can’t be built to keep better solutions out and customers in.”
As recently as 2021, companies like Goldman Sachs — which had axed plans to open a cryptocurrency desk in September 2018 — reversed course. By March 2021, Goldman Sachs kicked off a cryptocurrency desk.
Rep. Warren Davidson (R., Ohio), an ally of the crypto industry, explained that for years, there had been a “turf war” between banks and crypto companies that “frankly prevented us from passing any regulatory clarity up until now.”
Crypto companies have found allies in both Congress and in the Trump administration, both of whom have made hostility to the Biden-era Operation Choke Point 2.0 to debank the crypto industry top priorities.
But other, newer, players have also been on the scene making a difference, including Cameron and Tyler Winklevoss, who helped found Facebook.
Tyler recently explained that “the banksters are suing the CFPB to vacate the Open Banking Rule and end the open banking era. This is the kind of egregious regulatory capture that kills innovation, hurts the American consumer, and is bad for America.”
One Hill veteran noted to the Reporter that the Winklevoss twins’ emerging role in this fight has proven pivotal.
“The Winklevoss twins are deeply respected on the Hill because they supported President Trump before it was cool to be MAGA — when they pointed out that CFTC nominee Quintenz wasn’t aligned with President Trump, Senators listened,” the vet noted.