Choke Point or De-Banking? Why AML Enforcement Hits Crypto Harder Than Banks—and How to Fix It

U.S. officials say there’s no ban on banking lawful crypto firms. Yet a pattern of “de-risking” persists while megabanks caught in sweeping AML failures largely pay fines and move on. We unpack the record—and lay out fixes to end the double standard.

By CryptoCaster Editorial Board
Published: September 18, 2025

What Operation Choke Point actually was—and wasn’t

Operation Choke Point was a Department of Justice initiative circa 2013–2015 that pressured banks to scrutinize or sever ties with certain “high-risk” merchants. After congressional blowback, DOJ formally ended it in 2017 and stated it wouldn’t discourage banks from serving lawful industries. That history matters because some now describe a crypto-specific “Choke Point 2.0” as if it were a formal successor policy. It isn’t—and the original program was not an SEC creation.

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Policy vs. practice since 2023

After a turbulent 2022 for digital assets, the Federal Reserve, FDIC, and OCC issued risk bulletins about crypto-asset activities—liquidity, contagion, operational, and legal risks. Those same notices also said banks are neither prohibited nor discouraged from serving a class of lawful customers (including crypto firms).
In practice, many institutions still pulled back. That behavior—de-risking—is well documented across finance: banks reduce perceived regulator friction and reputational exposure by exiting entire customer categories rather than underwriting individual risk. Treasury’s own de-risking guidance warns that blanket cutoffs harm financial inclusion and push activity into the shadows. The message on paper is “risk-based, not category-based,” but the market often hears “don’t touch it.”

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The enforcement gap people feel

Over the past decade, large banks implicated in serious AML failings have typically faced corporate settlements—deferred prosecution agreements, monitorships, and headline fines. Senior executives rarely see criminal exposure.
By contrast, several high-profile crypto cases have included individual-level charges alongside corporate penalties (e.g., exchange founders and CEOs facing BSA/AML counts). Even where the absolute dollar volumes at banks dwarf those in crypto, the mix of consequences often looks tougher on individuals in the digital-asset sector. That contrast fuels the perception of a double standard.

Is it really a double standard?

Legally, prosecutors have broad discretion in charging decisions. Historically, corporate-crime enforcement in banking has leaned on DPAs/NPAs and monitorships—tools designed to penalize the institution and reform controls without triggering collateral damage to the financial system. Critics argue this approach under-deters misconduct and entrenches a “too big to jail” dynamic.
Crypto, being newer, more founder-centric, and often operating outside traditional prudential supervision, presents clearer lines of individual responsibility—so prosecutors reach for individual charges more readily. The result can look less like technology-neutral enforcement and more like venue-dependent justice.

A tech-neutral fix (that doesn’t require a conspiracy)

1) Ban category bans; enforce risk-based banking. Make it binding—banks must evaluate customers individually. If risk is unacceptable, state the reason in writing and allow a remediation window.
2) Parity of accountability. Similar AML program failures should trigger a consistent mix of corporate penalties and responsible-person consequences—bank, exchange, or fintech partner—applied to the same thresholds of willfulness and repeat violations.
3) Sunlight on supervision. Publish anonymized metrics: crypto vs. non-crypto account closures, reasons cited, remediation outcomes, and the number of lifted consent orders each year. Sunlight narrows the space for informal pressure.
4) Clear, durable rules. Consolidate guidance on custody, stablecoins, and partner-bank models so firms aren’t reading tea leaves. Stability of rules discourages defensive de-risking.
5) Safe harbors for fixing problems. Offer time-boxed safe harbors for firms that self-identify AML gaps, fund independent remediation, and hit milestones—lose protection if they miss.
6) Emphasize effectiveness. Tie AML program expectations to outcomes (useful SARs, risk reduction) rather than checkbox formalism that nudges banks toward blanket exits.

The precise claim this piece makes

Before crypto—and still today—most illicit finance moves through fiat channels, especially the U.S. dollar and the traditional financial system. Crypto misuse is real and growing in specific niches (ransomware, sanctions evasion), but it remains a minority share of overall illicit flows. If that’s true, then equal, tech-neutral AML enforcement is not only fair—it’s essential to avoid pushing lawful innovation offshore while leaving legacy blind spots intact.

Bottom line: We don’t need a “new Choke Point” to protect the system. We need transparent, risk-based banking and parity in how corporate and individual accountability are applied—whether dollars move through a correspondent network or a matching engine.

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