Updated on:12/05/2025 05:18 PM 
The cryptocurrency sector is increasingly expressing alarm as U.S. financial regulators implement policies that industry leaders describe as creating an environment where crypto-related businesses cannot operate effectively. Recent developments have solidified what Intelligencer describes as a "universal conviction" among digital asset professionals that American financial authorities are deliberately hindering rather than fostering cryptocurrency innovation.
According to multiple sources, U.S. regulatory bodies are establishing both formal and informal guidelines that render compliance extraordinarily difficult for cryptocurrency enterprises seeking to establish operations within the country's financial system.
"We've witnessed repeated instances where regulators publicly deny opposing cryptocurrency," stated Kristin Smith, CEO of the Blockchain Association, "yet their actions—particularly those from the Office of the Comptroller of the OCC—tell a completely different story when examining how crypto-related applications are being processed."
The recent rejection of Protego Trust's application serves as a stark illustration of these challenges. Despite receiving conditional approval in 2021 and designing its business model specifically to align with regulatory expectations, the digital asset custodian was ultimately denied a national trust charter based on an unspecified technicality.
Protego had meticulously structured its operations to appeal to Washington decision-makers, raising $80 million and achieving a $2 billion valuation in the process. The company specifically targeted institutional clients with its crypto custody services, deliberately avoiding retail investor engagement.
"This experience mirrors what most crypto companies face when navigating the U.S. regulatory landscape," explained Greg Gilman, founder of Protego. "Despite our efforts to build a business that would satisfy regulators, we encountered the same obstacles as everyone else."
Industry observers note parallels between current regulatory approaches and the controversial "Operation Chokepoint" policy implemented during the Obama administration. That initiative systematically restricted banking access for politically disfavored industries including gambling, tobacco, and adult entertainment.
Under Operation Chokepoint, financial regulators systematically limited these industries' access to essential banking services, often citing vaguely defined "reputational risks." The practice continued until Congressional intervention established safeguards against such discrimination.
Notably, the Biden administration rescinded these protections shortly after taking office, raising fears that regulators are once again attempting to systematically exclude certain industries from the financial system—with cryptocurrency being the latest target.
In response to these concerns, several Congressional members have formally requested that financial regulators disclose all communications with cryptocurrency businesses to determine whether discriminatory practices are being reinstated.
Recent Congressional hearings have provided a platform for industry participants to articulate the significant challenges they face in obtaining regulatory approval. Despite these testimonies highlighting numerous obstacles and frustrations, legislative action addressing these concerns remains pending.
These sentiments are shared by legal and political analysts who monitor regulatory developments. A former government official, speaking on condition of anonymity, confirmed that the current regulatory environment appears designed to limit cryptocurrency participation in the U.S. financial system.
