White House to Investigate Crypto Debanking Under New Executive Order

The Trump administration is initiating an effort to combat banking discrimination against cryptocurrency companies through a new executive order. This move is in response to allegations that financial institutions, under past regulatory pressure, have restricted services to crypto firms. By mandating a review of these practices, the order seeks to enhance consumer protection and promote fair access to banking for the crypto sector.

Key Takeaways

The White House is set to issue an executive order targeting discrimination against crypto companies by banks.
The order aims to investigate potential violations of consumer protection and antitrust laws by financial institutions.
The initiative responds to what the industry labels as “Operation Chokepoint 2.0,” which pressured banks to sever ties with crypto businesses.
High-profile industry figures have recounted experiences of being debanked without just cause.
The new order may lead to the elimination of internal policies that facilitate debanking practices.

White House to investigate crypto debanking under new executive order

Investigating Crypto Debanking Practices

In recent months, the Trump administration has stepped up its support for cryptocurrency regulation and is now focusing on addressing the issue of banking discrimination against crypto firms. A report from the Wall Street Journal indicates that the White House is preparing an executive order designed to investigate and take action against financial institutions that deny services to crypto companies due to regulatory pressures or political biases.

Expected to be signed this week, this draft order directly addresses concerns raised by the crypto sector regarding ‘Operation Chokepoint 2.0.’ This initiative reportedly encouraged banks to quietly cut ties with cryptocurrency businesses during the previous administration.

Once signed, this order will mandate federal banking regulators to examine whether financial institutions violated consumer protection, antitrust, or credit access laws when they severed connections with clients linked to cryptocurrency. Institutions found guilty could face consequences such as financial penalties, consent agreements, or, in severe cases, referrals to the Department of Justice (DOJ).

During the Biden administration, the crypto industry faced increasing scrutiny from regulators, particularly the US Securities and Exchange Commission (SEC), led by former Chair Gary Gensler. The pressure intensified as multiple federal agencies, including the Federal Deposit Insurance Corporation (FDIC) and the DOJ, seemingly collaborated to encourage banks to cease services for crypto-related businesses. This aggressive push often took place without public explanation.

Venture capitalist Nic Carter was among the first to highlight this coordinated effort in 2023, revealing that regulators, under Biden’s leadership, were leveraging their influence over the banking system to implement a stealthy but rigorous crackdown on the crypto industry. He stated, "The US government is using the banking sector to organize a sophisticated, widespread crackdown against the crypto industry."

Prominent figures in the crypto community, including Kraken founder Jesse Powell and Tyler Winklevoss of Gemini, have shared their experiences of being debanked without clear justification. Winklevoss expressed the frustration of being debanked simply for being in the cryptocurrency space on a recent X post.

In a November 2024 podcast with Joe Rogan, a16z co-founder Marc Andreessen claimed that more than 30 tech founders had fallen victim to these government-led debanking campaigns, highlighting the expansive nature of the crackdown.

Lawmakers have also pointed to the Federal Reserve’s role in these actions. In July, Senator Cynthia Lummis criticized the Fed for either standing by or actively obstructing the crypto industry's access to essential infrastructure, such as Fed master accounts. Many crypto firms have reported having their applications unjustly denied or delayed, further perpetuating concerns that the central bank was complicit in sidelining the industry.

Under the new directive from the White House, there is an increasing focus on addressing the previous administration’s antagonism towards the crypto sector and its interrelations with banks and financial services. The executive order is anticipated to direct regulators to eliminate any internal policies that facilitated debanking practices to prevent future occurrences.

Regulators have often justified their stringent approach to cryptocurrency by citing risks associated with illicit activities. However, many in the industry argue that this rationale is fundamentally flawed. As Carter noted, "Yes, as in any industry, there are bad actors…but focusing solely on these individuals to shape crypto banking policy is akin to debanking the asset management industry over Bernie Madoff, or debanking energy companies because of Enron."