Key Insights
- President Trump is preparing an executive order that targets banks that discriminate against crypto firms.
- The order will direct federal agencies to investigate banks under laws like the Equal Credit Opportunity Act and antitrust regulations.
- If the order becomes law, it could force banks to open services to crypto and politically sensitive clients.
The Trump administration is preparing yet another executive order. This order aims to reduce discrimination in the banking sector, mainly when targeted against crypto firms and conservative organisations.
This move could massively change how banks treat politically sensitive clients and companies that work with digital assets.
President Trump’s Executive Order to Tackle Crypto Banking Bias
This initiative from the White House was proposed to penalise banks. These banks are accused of denying services to crypto firms and right-leaning groups unfairly.
According to a report by The Wall Street Journal, the order will compel federal regulators to investigate such banks. They could do so under laws like the Equal Credit Opportunity Act, consumer protection statutes, and antitrust laws.
If finalized, it would represent a major move by the US Government to support financial access. It aims to uplift communities historically excluded by large banks.
It is aimed at preventing “debanking.” There, institutions cut clients off based on their political standings or affiliations within the industry.
Why Crypto Firms and Conservatives Are Being Shut Out
For years, crypto companies and conservative groups have complained about being targeted unfairly by banks. Many have claimed that their accounts were closed or denied service. They faced this because of their political or ideological bias.
One particular example is from the Bank of America. This allegedly shut down the account of a Christian organisation that operated in Uganda.
The bank claimed it closed the account because of its policy of not working with small businesses outside the US. However, critics saw it as part of a discriminatory pattern among banks.
The crypto sector has faced similar issues. Exchanges like Coinbase and Frax Finance have reportedly had their accounts closed by banks like JPMorgan Chase. Oftentimes, they receive the news without an apparent reason from the banks.
Some believe this pattern of account closure is due to pressure from regulators aiming to restrict crypto’s growth. It’s an approach that critics have called “Operation Chokepoint 2.0.”
President Trump: Executive Order Could Bring Big Changes to Bank Policies
President Trump’s executive order doesn’t just investigate the current behaviour of banks. It also instructs agencies like the Small Business Administration (SBA) to determine whether banks treat loan applicants fairly. This especially applies to those applying for SBA-backed loans.
It pushes regulators to remove unnecessary laws that allow banks to deny services based on “reputational risk”. According to critics, this has given banks too much leeway. Of this, they have taken advantage to act as ideological gatekeepers.
If regulators find violations of this new order, consequences could include fines and consent decrees. They can even involve legal mandates to change discriminatory practices. Banks could even face penalties directly from the Department of Justice.
Crypto Industry Reacts
Crypto industry insiders see this order proposal as a game-changer for the community and its companies. Investor Paul Barron said this could force banks to embrace crypto companies. As a result, the industry could see a surge in institutional money.
Changpeng Zhao (CZ), the founder of Binance, also weighed in on the development. He stated that it could stop banks from ignoring the crypto industry altogether.
Considering this new federal backing, banks might no longer be able to deny services to crypto firms. At least, not without solid reasons on the legal side. This could encourage innovation and much-needed investment within the space.
Banking Giants Respond Amid Regulatory Pressure
Some major banks have already begun taking steps to clarify their internal policies in response to the pressure. They now insist they do not discriminate based on political belief or business type.
The Bank of America, for example, mentioned that it is working with federal agencies to improve regulatory clarity. A spokesperson said the bank welcomes the administration’s efforts and looks forward to collaborating with Congress and regulators.
Despite these public statements, many in the crypto industry are still skeptical. They argue that behind closed doors, banks are still highly discriminatory against crypto-related businesses.
In all, if signed, this executive order could do several things. This could prevent banks from dropping clients based solely on political or industry bias. It could also force banks to explain account closures without legal grounds.
