Cryptocurrencies like bitcoin were conceived as a way to challenge traditional banks. Now, with the help of the tech billionaires Elon Musk and Marc Andreessen, the crypto industry is fighting for something else entirely: the right to have a checking account.?
Musk and Andreessen are some of the prominent and powerful voices trying to make a case that crypto industry players are being wrongly discriminated against when they try to work with big corporate banks. The allegation is that banks, under pressure from the Biden administration, have unfairly “debanked” people who work with cryptocurrency by terminating their bank accounts.?
The concept of “debanking,” a previously obscure term, has received fresh attention in the past month after Andreessen, an investor and co-founder of Netscape, said in an interview with podcast host Joe Rogan that he knows 30 tech company founders who had been “debanked in the past four years” — a claim that set off a flood of anecdotes from social media users complaining that they, too, had lost access to their bank accounts.?
Musk said on X that debanking is an example of “how evil the government has been” and that it should be a federal crime if it’s politically motivated.?
It’s an allegation that various federal regulatory agencies reject as untrue. The Office of the Comptroller of the Currency, which charters and supervises all national banks, said that it expects banks to assess the risks of their customers on a case-by-case basis.?
“The OCC does not direct banks to open, close, or maintain individual accounts. Nor does the OCC recommend or encourage banks to engage in the wholesale termination of categories of customer accounts,” the office said in a statement.?
The White House referred questions about the Musk and Andreessen statements to the Treasury Department, which declined to comment.?
There is no guaranteed right to banking services, and Andreessen and Musk both have a history of making inflammatory political statements. But their comments about debanking appear to have tapped into a well of discontent among crypto enthusiasts, right-wing activists and even bank lobbyists about how traditional banks are operated in the U.S.?
Many crypto firms must navigate a maze of government regulations designed to ensure their services aren’t used for money-laundering by criminals, terrorist organizations or rogue governments such as North Korea. It’s an area with so many compliance requirements that some banks decide it’s not worth the trouble, especially if the customer is a tiny startup.?
JPMorgan Chase, the nation’s largest bank by assets, said that regulators do expect banks to close accounts quickly when there’s a risk of financial crime, or else face potential billion-dollar fines.?
“The complexity of managing such compliance is often simply too high for some businesses where there are challenges in monitoring for risk,” the bank said in a statement. “We welcome the opportunity to work with the new Administration and Congress on ways to remove regulatory ambiguity while maintaining our country’s ability to address financial crime.”?
Now, Musk and Andreessen are pushing for massive changes in the banking sector, using their newfound political influence with President-elect Donald Trump to help the cryptocurrency industry and others who they say have been unfairly cut off from traditional banks.?
Andreessen’s investment firm, Andreessen Horowitz, argued in a blog post last month that “everyone has the right to a bank account — even crypto companies,” and in a follow-up last week it denounced “compliance headaches” in general.?
Musk, in response to an X post last month about debanking, called for “deleting” the Consumer Financial Protection Bureau, saying there are “too many duplicative regulatory agencies” — even though the CFPB has denounced the practice of debanking and vowed to help fight it.
The CFPB, whose director, Rohit Chopra, was appointed by President Joe Biden, is currently fighting in a federal appeals court for the authority to investigate debanking allegations. Last month, the CFPB finalized a rule to oversee payment wallet apps, saying it wants to stop them from unfairly debanking customers. The rule means the CFPB could one day regulate Musk’s X if Musk follows through on adding a payments service to the social media app.?
Last week, in a victory for the crypto industry, Trump said he would appoint the venture capitalist David Sacks, an industry ally, as his “White House A.I. & Crypto Czar.” Sacks has for years argued against debanking, including telling The Free Press in 2022 that his former company, PayPal, is wrong to ban extremists. Trump has also said he’ll nominate Paul Atkins, a longtime crypto advocate, to be chair of the Securities and Exchange Commission.?
Trump during the campaign wooed crypto industry support in part by talking about debanking.?
“They target your banks. They choke off your financial services,” he told the Bitcoin 2024 Conference in Nashville, Tennessee, in July. A month later, he said he wanted to make the U.S. the “crypto capital of the planet.”?
The Trump family says they’ve been debanked. Melania Trump said in her memoir, “Melania,” that her long-time bank “decided to terminate my account” after she left the White House in 2021 and wouldn’t let her son, Barron Trump, open an account. Donald Trump Jr. has said he lost access to banking services.?
A spokesperson for the Trump transition team did not respond to a request for comment on the president-elect’s plans.?
But the concern about debanking crosses party lines. Rep. Ritchie Torres, D-N.Y., posted on X this month that debanking is “an insidious threat to civil liberties in America,” mentioning Andreessen’s comments but not any specific sector or incident.?
The anecdotes about debanking may have a note of irony, given that cryptocurrency has been based on an anarchist ideology and outlaw image since its beginnings. Cryptocurrency developers have long said they want to replace traditional financial institutions, not rely on them.?
It’s not clear how widespread debanking actually is. The Blockchain Association, an industry trade group, last year started a tip line for people who believed they’d been debanked, and now the group says it has identified a pattern of “more than 30 concrete cases of denied applications or debanking” due to banking customers’ “involvement in the digital asset industry.” It declined to release details of those cases, saying that it is still investigating the claims.?
“As we continue to wait for responses to our FOIA requests, we’re exploring additional options to ensure the unlawful debanking of our industry ends,” Marisa Coppel, the Blockchain Association’s head of legal, said in a statement.?
Last month, the association sent a letter to Trump asking him to end the practice of debanking, possibly via an executive order.?
In the interview with Rogan, Andreessen didn’t provide examples or evidence of crypto-related debanking. Still, his comment prompted others to share personal stories about losing access to banking services with no explanation and despite having good credit. This situation could cripple a business or someone’s personal life.?
Sid Kalla, the co-founder of the crypto startup company Roll Labs in New York, was among those who spoke up. His company, also known as Turing Holdings, helps online creators mint digital tokens, which people can then trade online. After Andreessen’s interview, he posted a photo on X of a cancellation notice he said he received from Chase in May. The notice was about a business account, and Kalla said that it had been a seven-year banking relationship.?
“We tried to find out what happened,” Kalla said in an interview. “We tried to email and call our banker in the Brooklyn Heights branch, and no one had access to look behind the curtain. The employees were all very nice, but they honestly didn’t seem to know the reason.”?
Kalla said the startup was without a checking account for three to four weeks, forcing a delay in paychecks for its 12 employees and contractors. Kalla’s post on X has received 2.9 million views.?
Chase, a unit of JPMorgan Chase, declined to comment on Roll Labs’ situation, citing a policy of not speaking about individual accounts.?
At least one bank industry trade group says debanking is a real issue — and one that’s caused by government regulators’ pressure. Piggybacking off the comments by Andreessen, the Bank Policy Institute, whose chairman is JPMorgan Chase CEO Jamie Dimon, accused bank regulators of running a “secret enforcement regime” through government-appointed examiners who closely monitor bank operations.?
“It’s a regime where an examiner’s mandate that a bank designate a client as ‘high risk’ generally forces the bank to close the account,” the institute said in a post on X, linking to a statement from last month calling for major deregulation.?
While much of the crypto industry remains legal, cryptocurrency has had a scandal-filled few years, with the founders of trading platforms Binance and FTX going to prison, and the government has been slowly chipping away at areas it views as outside the law, such as digital tokens that some regulators argue are indistinguishable from traditional securities. The FBI says it received more than 69,000 complaints last year related to alleged cryptocurrency fraud, and the Treasury Department says various cryptocurrency firms have been used by Russian gangs and the North Korean government.?
The stakes in the debanking debate are potentially high. Some crypto investors and lawmakers have proposed what would be, in effect, a federal right to banking services, and for some lobbying groups, the topic has become an opportunity to criticize other banking regulations, such as anti-money laundering compliance.?
Several Republicans in Congress including Sen. Kevin Cramer, of North Dakota, have sponsored a bill, the Fair Access to Banking Act, which if passed would force banks, payment card networks and other financial services companies to do business with “any person who is in compliance with the law.”?
Cramer told NBC News that he will reintroduce the bill next year and also seek changes via administrative rulemaking.?
“My first intention is to reintroduce it, build the coalition to support it, and begin working with the Trump administration as soon as possible on a rulemaking,” he said in a statement. “The coalition is growing as more industries and individuals get debanked.”?
The issue has been bubbling since last year, and it’s not only the crypto industry that is complaining about getting cut off from banking services. Pawn shops, firearms manufacturers and mining companies have joined a growing chorus of industries that say banks are discriminating against them, while Muslim charities and Jan. 6 rioters say they’ve also been targeted for political reasons.?
The allegations have echoes of an Obama-era program at the Justice Department named “Operation Choke Point.” Designed to put pressure on payday lenders, the program involved bringing cases against banks that had allegedly looked the other way in processing unlawful payments. Some crypto investors call the latest wave of debanking examples “Operation Choke Point 2.0.”?
People in the crypto industry say the pressure on banks by regulators has been mostly informal, with no explicit directive to stop doing business with their industry, but there has been some guidance in writing. In January 2023, weeks after federal prosecutors charged FTX founder Sam Bankman-Fried, three federal regulatory agencies — the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency — called on banks to limit their exposure to crypto activities and risks.?
“It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system,” the agencies said in a joint statement. The debanking allegations appeared to begin shortly after, popping up in an article by a venture capitalist in Pirate Wires, a publication started by a venture capital marketing employee.?
The FDIC and Federal Reserve declined to comment.?
On Friday, the crypto exchange Coinbase released a slew of letters it received after suing the FDIC last year, and in the letters the FDIC asks banks to “pause” or “refrain from providing” various services the banks had intended to launch.?
Paul Grewal, chief legal officer for Coinbase, said he believes the FDIC may be acting unlawfully.?
“There’s no statutory authority for the FDIC to say, ‘We don’t like a particular industry,’” he said in an interview. “Today, it’s crypto. Tomorrow, it might be alcohol.”?
The agency in a report this year denied it was targeting crypto startups or any other class of customer. Banks “are neither prohibited nor discouraged from providing banking services to customers of any specific class or type,” the FDIC said in its 2024 Risk Review.?
The FDIC has also complained about the conduct of some crypto firms, some of which have falsely represented to their customers that their products are eligible for FDIC deposit insurance coverage, according to an agency advisory in 2022.