When President Donald Trump’s family faced growing pressure from banks, it embraced crypto. Now, immigrants who are in the U.S. illegally face a similar choice under what policy experts describe as a move that could force people out of the traditional banking system.

On May 19, the president issued an executive order “to restore integrity to America’s financial system.” In the name of national security, the directive tasked federal regulators such as the Treasury Department with considering rules that would tighten oversight on fraud screening and risk mitigation associated with extending services to immigrants who are undocumented.

Under President Joe Biden’s administration, “debanking” emerged as a rallying cry for the crypto industry, fueled by an alleged plot referred to as “Operation Chokepoint 2.0.” The suspected scheme centered on perceived risks tied to doing business with the sector, eventually prompting congressional investigations and the release of internal regulatory documents.

Trump’s executive order exposes tension between measures meant to safeguard American banks from unverified risks and the crypto industry’s high-profile battle against debanking, while creating parallels between supposed Biden-era tactics and the genesis of a crypto empire.

The administration maintains that tightening protocols is long overdue.

“Gaps in customer identification practices have allowed terrorists, drug traffickers, money launderers, and other criminal networks to exploit U.S. financial institutions to move illicit funds and evade law enforcement,” the White House stated in an accompanying fact sheet.

Since World Liberty Financial was established in 2024, Eric Trump and Donald Trump Jr. have cited challenges posed by banks as a driving force behind the family crypto venture. Last year, Trump Jr. said at a conference, “We got into crypto because—out of necessity—we were debanked.”

Under Operation Chokepoint 2.0, regulators allegedly pressured banks behind closed doors to sever ties with crypto firms, labeling the industry as a “reputational risk.” The term was popularized by Nic Carter, founding partner of investment firm Castle Island Ventures, who told Decrypt that even though the circumstances are different, he opposes the new policy.

“It’s pretty cruel to deprive someone of access to financial infrastructure entirely, or force them to utilize cash, shadow banks, or fringe infrastructure, which might not be safe or credible,” he said. “And that extends to folks that are here in the country illegally.”

‘Escape hatch’

The crypto industry has positioned itself as a middleman-free alternative for anyone with a smartphone to store and transfer wealth, but some policy experts caution that any adoption amid the current political climate would be driven by duress—not preference.

Nicholas Anthony, a research fellow at the Cato Institute, a prominent libertarian think tank, told Decrypt that Trump’s executive order is effectively “deputizing banks as immigration enforcement officers,” while encouraging a Big Brother-like atmosphere.

Anthony added that some undocumented immigrants will turn to crypto as an alternative lifeline, while others are likely to use organized crime groups such as cartels as a way to remit money home, because those enterprises offer a deeply rooted system that’s commonly known.

“People are going to have their accounts shut down, but many more people are likely going to view the financial system with fear or hostility, and they’re going to see alternatives as a lifeline or an escape hatch,” he said. “It’s basically painting the banking system as a hostile place.”

Testifying before the House Financial Services Committee last week, Anthony argued that the Bank Secrecy Act represents a costly, broken financial surveillance system.

Similar concerns have long been shared by influential conservatives, such as Rep. Tom Emmer (R-MN), who has said financial surveillance erodes civil liberties. The stance was echoed at the hearing by Rep. Juan Vargas (D-CA), who said, “The government is surveilling too much.”

‘Shadow banking system’

Stablecoins, which are often pegged to the U.S. dollar, may soon fall under that scope. The recently issued executive order directed the Treasury to craft guidance that specifically looks at the use of “peer-to-peer payments platforms to facilitate ‘off-the-books’ wage payments.”

But undocumented immigrants have other tools at their disposal, including Bitcoin ATMs that allow customers to exchange cash for crypto. Notably, Bitcoin Depot pulled the plug on 9,000 kiosks in the U.S. when filing for Chapter 11 bankruptcy earlier this month.

Tom Feltner, associate director of consumer policy at Americans for Financial Reform, a nonprofit that advocates for tighter rules on Wall Street, told Decrypt that stablecoins and Bitcoin ATMs lack safeguards required by remittance providers under federal law. That includes the ability to reverse payments within a 30-minute window, no questions asked.

“There’s no uniform set of protections,” he said. “This is exactly the kind of shadow banking system that we’ve designed remittances to stay out of, rather than pushing people into.”

Even if crypto can easily flow across borders, converting digital assets into local currency represents a real barrier, Dilip Ratha, a former economist at the World Bank who has studied remittances for decades, told Decrypt. He noted that stablecoins have still seen notable adoption in corridors where banking access isn’t dependable, including Sudan and Nigeria.

Since the events of September 11, 2001, Ratha said banking rules have tightened significantly, and a lot of immigrants have either found proper documentation or lost access.

“The number of people who have an irregular immigration status and bank accounts must be small,” he said. “Do you really want to waste so much resources going after a few people?”

The executive order comes as banking regulators turn the page. Last month, agencies such as the Office of the Comptroller of the Currency eliminated reputation risk as a supervisory tool. During President Barack Obama’s administration, the original Operation Chokepoint targeted politically disfavored industries, including gun dealers and payday lenders.

Although Castle Island Ventures’ Carter is hesitant to label Trump’s immigration crackdown as “Operation Chokepoint 3.0”—because it’s aimed at individuals, not lawful businesses—he warned that expanding government oversight establishes a dangerous blueprint.

“I think conservatives should worry about this as well, even if it seems like it’s sort of serving our short-term goals,” he said. “Trump is going after illegal immigrants today, but what happens in a Democratic administration?”