Regulatory Challenges: Crypto Sectors Debanked by Major Banks
Full Transcript
The nine largest US banks restricted financial services to politically contentious industries, including cryptocurrency, between 2020 and 2023, according to preliminary findings from the Office of the Comptroller of the Currency, or OCC.
The OCC reported these findings on Wednesday, stating that major banks made inappropriate distinctions among customers based on their lawful business activities during this three-year period. The banks either implemented policies restricting access to banking or required escalated reviews and approvals before providing financial services to certain customers.
This review was initiated following an executive order signed by President Donald Trump in August, which directed a review of whether banks had debanked or discriminated against individuals based on political or religious beliefs.
The OCC's report identified not only crypto but also sectors that faced banking restrictions, including oil and gas exploration, coal mining, firearms, private prisons, tobacco and e-cigarette manufacturers, and adult entertainment.
The OCC noted that banks like JPMorgan Chase, Bank of America, Citibank, Wells Fargo, US Bank, Capital One, PNC Bank, TD Bank, and BMO Bank were examined. Jonathan Gould, the Comptroller of the Currency, expressed disappointment that the nation’s largest banks considered these harmful debanking policies an appropriate use of their government-granted charter and market power.
The OCC's investigation continues and may refer its findings to the Justice Department. Nick Anthony, a policy analyst at the Cato Institute, criticized the OCC's report for not addressing the most well-known causes of debanking, stating that it fails to mention that regulators assess banks on their reputation.
He also highlighted that the Federal Deposit Insurance Corporation, or FDIC, explicitly advised banks to avoid cryptocurrency companies. Caitlin Long, the founder and CEO of crypto-focused Custodia Bank, pointed out that the FDIC and Federal Reserve were the worst culprits of crypto-related debanking under the Biden administration, rather than the OCC.
Long noted that this report only covers large banks, suggesting that the issue of crushing crypto was not a supervisory priority for larger banks as it was for smaller and mid-sized banks.