Crypto Regulation at a Crossroads: ECB Warns of Stablecoins, US Banks Continue Debanking

JPMorgan Closes Account of Bitcoin Entrepreneur

The debate over cryptocurrency regulation is escalating on both sides of the Atlantic. In the US, banking giant JPMorgan Chase has terminated the accounts of Jack Mallers, CEO of Bitcoin payment service provider Strike, without providing reasons. "Last month, J.P. Morgan Chase kicked me out of the bank," Mallers wrote on X on Sunday. "Every time I asked why, they said the same thing: We're not allowed to tell you."

The incident has fueled concerns about a new wave of so-called "debanking"—a term describing the systematic account termination of crypto companies by traditional banks.

Allegations of "Operation Chokepoint 2.0"

US Senator Cynthia Lummis views the incident as further evidence of "Operation Chokepoint 2.0," a term used by critics to describe alleged government pressure on banks to end business relationships with crypto companies. "Operation Chokepoint 2.0 regrettably continues," Lummis stated on X on Monday. Such measures would undermine trust in traditional banks and drive the digital asset industry overseas.

These concerns are intensified by claims from an anonymous whistleblower who contacted Lummis's office in January, alleging that the Federal Deposit Insurance Corporation (FDIC) is destroying "materials" related to Operation Chokepoint 2.0.

Caitlin Long, CEO of Custodia Bank, warned that debanking efforts against crypto companies could potentially continue until January 2026, depending on the appointment of a new Federal Reserve governor.

ECB Warns of Stablecoin Risks

Meanwhile, the European Central Bank (ECB) is sounding the alarm over stablecoin risks to financial market stability. According to the ECB, stablecoins can lead to volatility if their values significantly deviate from underlying asset prices or if investors rapidly withdraw funds.

The combined market capitalization of all stablecoins has risen to over $280 billion—approximately 8 percent of the total crypto market. The market is dominated by dollar stablecoins Tether (USDT) with $184 billion and Circle (USDC) with $75 billion.

Growth Forecasts Intensify Concerns

Of particular concern to the ECB is that today's stablecoin market is primarily driven by trading activities. Approximately 80 percent of trading activity on centralized crypto exchanges involves stablecoins. Major risks lie specifically in a decoupling from reference values and massive redemption waves by users.

Since leading stablecoins are backed by substantial reserves of traditional financial assets, particularly short-term US Treasury bonds, their growth is directly coupled to global financial markets. By 2028, market capitalization could rise to $2 trillion, which would amplify "spillover risks."

Call for Global Regulation

The ECB authors are calling for global regulatory harmonization in line with the G20 roadmap and recommendations from the Financial Stability Board. This demand contrasts with US banking practices that, according to critics, hinder innovation in the crypto sector.

Notably, US banks themselves have paid over $200 billion in fines over the past two decades for compliance violations, while simultaneously criticizing crypto firms over alleged risks in illegal financing.