The Trump administration is reportedly preparing an executive order that could impose stringent penalties on banks accused of closing accounts based on political beliefs or involvement with crypto.
The measure aims to end alleged discrimination against digital asset firms and politically active individuals alike.
Background: How the Banking-Crypto Rift Began
For years, cryptocurrency companies have claimed they were deliberately excluded from mainstream banking services. Specifically, they point to “Operation Chokepoint 2.0,” a term used by industry figures to describe banking practices under Biden’s administration.
According to them, these practices created an environment where digital asset firms faced sudden account terminations without clear justification.
However, banks reject these allegations, saying closures are tied to legal, regulatory, or financial risks. In particular, they point to anti-money laundering (AML) compliance, which allows them broad discretion over customer suitability.
Tensions escalated further during Biden’s term, as many crypto-related firms and individuals reported facing stricter banking restrictions. Industry leaders said these measures stifled innovation and limited access to essential financial services.
The Trump administration now seeks to reverse this trend, presenting itself as a defender of crypto interests.
Central to this shift was ending the use of “reputational risk” in customer assessments, a policy that allowed banks to deny service based on possible public image issues.
The “reputational risk” standard had given banks broad discretion to end relationships with certain industries, including companies in the digital asset (cryptocurrency) sector. Removing it reduced that discretion and signaled a more supportive regulatory stance toward digital assets.
This change has led more industry figures to share their experiences openly, bringing renewed attention to high-profile “debanking” cases.
High-Profile Victims of ‘Debanking’
Coinbase CEO Brian Armstrong said JPMorgan Chase warned clients in 2023 it would close accounts linked to primary cryptocurrency income.
Frax Finance founder Sam Kazemian, Gemini co-founder Tyler Winklevoss, Custodia Bank CEO Caitlin Long, and Bitcoin Foundation’s Charlie Shrem shared similar experiences. In November 2024, Elon Musk claimed 30 tech entrepreneurs had accounts shut down under earlier policies.
Traditional banks have long viewed cryptocurrencies with caution, citing volatility, regulatory uncertainty, and risks of fraud.
Meanwhile, crypto advocates argue that decentralized finance poses a threat to banks’ control over transactions and profits. These mounting tensions have paved the way for decisive federal action.
The Executive Order: Laws and Penalties in Focus
According to The Wall Street Journal, the White House executive order, expected within days, will direct federal bank regulators to investigate whether financial institutions have violated major federal laws.
These include the Equal Credit Opportunity Act, which prohibits credit discrimination; antitrust laws, which aim to maintain fair competition; and consumer protection statutes, which guard against unfair banking practices.
If violations are found, banks could face hefty fines, legally binding consent decrees, or other penalties. The measure is intended to deter institutions from using compliance rules as a pretext for politically motivated or industry-specific account closures.
Global Struggle Between Banks and Crypto
Globally, similar conflicts are emerging. In the UK, regulators recently banned a Coinbase ad campaign criticizing the financial system, underscoring a worldwide clash between traditional banking structures and the growing crypto economy.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
