Trump's Order Targets Crypto Debanking Penalties

President Trump is preparing to sign an executive order aimed at financial institutions involved in debanking practices against businesses and individuals, including those in the crypto sector, as reported by The Wall Street Journal. The draft order seeks to combat perceived discrimination against crypto companies and conservative individuals, imposing potential penalties on banks that exclude customers for political reasons. It also tasks regulators with investigating possible violations of the Equal Credit Opportunity Act, antitrust laws, and consumer protection laws, although no specific firms are mentioned. The executive order is anticipated to be signed as early as this week, though the timing remains uncertain according to sources familiar with the situation. Debanking, often referred to as "Operation Choke Point 2.0," points to targeted actions that disconnect crypto and other businesses from financial services amid increased regulatory scrutiny, particularly under the previous Biden administration. This follows a similar initiative from 2013, Operation Choke Point 1.0, which aimed to limit banking services for high-risk industries. The draft also instructs regulators to eliminate any policies contributing to debanking, mandates the Small Business Administration to assess its lending practices, and encourages reporting certain violations to the attorney general. Recently, banks have been revising their policies and meeting with Republican attorneys general to assure they do not discriminate based on political affiliation, aiming to avert federal intervention. Under the Trump administration, the Federal Reserve, OCC, and FDIC have pledged to cease considering "reputational risk" when evaluating customer relations. Crypto executives have shared their experiences with debanking, asserting that banking services were denied for political reasons. However, banks attribute these decisions to legal, regulatory, and financial pressures, particularly regarding U.S. anti-money-laundering laws. Trump himself, once critical of the crypto industry, embraced it during his reelection campaign, supported by notable figures within the crypto community. Among his commitments were to dismantle Operation Choke Point 2.0 and create a more favorable regulatory environment for crypto. Following Trump's victory, several industry leaders began to voice their experiences of debanking. The U.S. House Committee on Oversight and Government Reform is currently investigating allegations of debanking in the crypto sector, consulting companies like Coinbase, Kraken, and Uniswap Labs. In January, Eric Trump revealed his personal encounter with debanking after being dropped by several banks, emphasizing the significance of crypto in today's financial landscape. "I never thought I’d fall into the world of crypto until every bank began cancelling us for absolutely no reason other than the fact that my father was in politics," he stated. The Block remains dedicated to providing independent news and insights into the crypto industry, with financial backing that ensures objectivity in reporting.