Inside the Rise of ‘Debanking’: Tech’s Right-Wing Elite Takes Action

Cryptocurrencies, like Bitcoin, emerged as bold challengers to the traditional banking system. But now, with tech titans Elon Musk and Marc Andreessen in the ring, the crypto industry is fighting for something even more fundamental: the right to access a checking account.

Musk and Andreessen are leading a charge against what they claim is wrongful discrimination against crypto entrepreneurs by major corporate banks. They assert that under pressure from the Biden administration, banks are “debanking” individuals in the crypto space—essentially shutting them out of the banking system altogether.

The term “debanking” has gone from obscure to front-page news, especially after Andreessen shared that he knows of at least 30 tech founders who have faced this issue in the last four years during an interview with Joe Rogan. This revelation sparked a wave of social media testimonies from others reporting similar experiences of losing access to their accounts.

Musk didn’t hold back, tweeting on X that debanking exemplifies “how evil the government has been,” suggesting it should be considered a federal crime if politically motivated.

However, various federal agencies have dismissed these accusations. The Office of the Comptroller of the Currency, which oversees national banks, clarified that they do not instruct banks to open or close individual accounts, nor do they advocate for the blanket cancellation of any customer category.

“The OCC expects banks to assess their customers on a case-by-case basis,” stated the office, reinforcing that they do not promote mass terminations of accounts.

Questions directed at the White House regarding Musk and Andreessen’s claims were referred to the Treasury Department, which opted not to comment.

While there’s no universal right to banking services, Andreessen and Musk’s remarks seem to have struck a chord with crypto enthusiasts, right-wing activists, and even bank lobbyists who are frustrated with how traditional banks operate in the U.S.

Many crypto companies are forced to navigate a labyrinth of regulations aimed at preventing their services from being exploited for money laundering, terrorism, and evading sanctions from rogue regimes like North Korea. The compliance burden has become so daunting that some banks choose to steer clear of potential partnerships, especially with smaller startups.

JPMorgan Chase, the largest bank in the U.S., stated that regulators expect them to act swiftly to close accounts at risk of financial improprieties, or they could face hefty fines.

“The complexity of managing compliance often proves too high for certain businesses, particularly those facing challenges in risk monitoring,” JPMorgan’s statement read. “We are open to collaborating with the new Administration and Congress to clarify regulations while still combating financial crime.”

Musk and Andreessen are now advocating for sweeping reforms in the banking landscape, leveraging their influence with President-elect Donald Trump to support the crypto industry and others they believe have been unjustly excluded from traditional banking.

In a recent blog post, Andreessen’s firm, Andreessen Horowitz, argued that “everyone has the right to a bank account—even crypto companies,” and called for an end to the “compliance headaches” currently plaguing the sector.

Musk, responding to discussions about debanking, voiced his opinion that the Consumer Financial Protection Bureau should be dissolved, claiming there are “too many duplicative regulatory agencies.” Ironically, the CFPB has itself condemned the practice of debanking and vowed to combat it.

The CFPB, led by Rohit Chopra, who was appointed by President Biden, is currently pursuing legal authority to investigate debanking claims. Last month, the CFPB finalized new rules aimed at overseeing popular digital payment applications to prevent unfair debanking.

In a boost for the crypto sector, Trump recently announced plans to appoint venture capitalist David Sacks, a known ally of the crypto industry, as his “White House A.I. & Crypto Czar.” Sacks has been vocal against debanking, previously stating that PayPal made a mistake by banning certain extremist users. Trump also plans to nominate Paul Atkins, a longtime advocate for crypto, to chair the Securities and Exchange Commission.

Trump has actively sought support from the crypto community by addressing the issue of debanking directly. At the Bitcoin 2024 Conference in Nashville, he remarked, “They target your banks. They choke off your financial services.” Just a month later, he expressed his ambition to make the U.S. the “crypto capital of the planet.”

Even the Trump family has claimed to experience debanking issues firsthand. Melania Trump recounted in her memoir that her bank terminated her account after her time in the White House, impacting her son Barron Trump as well. Donald Trump Jr. has made similar claims about losing access to banking services.

A spokesperson for Trump’s transition team did not respond to inquiries regarding the President-elect’s plans.

The concern over debanking transcends party lines. Rep. Ritchie Torres, D-N.Y., recently stated on X that debanking poses “an insidious threat to civil liberties in America,” referencing Andreessen’s remarks without specifying incidents.

Ironically, the discussions surrounding debanking surface amid the crypto community’s historical roots in an anarchistic ideology that sought to disrupt conventional financial institutions rather than depend on them.

While the full scope of debanking remains unclear, the Blockchain Association, an industry trade group, reported identifying over 30 confirmed cases of denied applications or debanking tied to customers involved in the digital asset sector. They are currently investigating these claims.

“As we await responses to our FOIA requests, we are exploring further avenues to ensure that unlawful debanking comes to an end,” stated Marisa Coppel, the Blockchain Association’s head of legal.

In response to the surge of anecdotes shared by industry professionals, Sid Kalla, co-founder of crypto startup Roll Labs in New York, shared his own experience after Andreessen’s interview. His company was left without a checking account for three to four weeks, delaying paychecks for 12 employees and contractors, after Chase terminated a longstanding banking relationship without explanation. His post received nearly 3 million views on X.

Chase, a JPMorgan Chase subsidiary, declined to comment on Kalla’s situation, citing a policy of confidentiality regarding individual accounts.

One banking trade group supports the notion that debanking is a genuine issue arising from government regulatory pressure. The Bank Policy Institute, led by JPMorgan Chase CEO Jamie Dimon, accused regulators of implementing a “secret enforcement regime” that coerces banks into labeling clients as “high risk,” effectively forcing account closures.

“This regime compels banks to close accounts under the mandate of examiners,” the institute stated on X, advocating for major deregulation.

Despite the legal status of much of the crypto industry, it has faced its share of scandals, with high-profile trading platform founders like Binance and FTX being sentenced to prison for various offenses. Regulatory bodies are gradually tightening their grip on what they perceive to be illicit activities, including digital tokens often deemed indistinguishable from traditional securities.

The stakes are high in this debanking debate. Some crypto advocates and lawmakers are pushing for a federal right to banking services, while other lobbying groups see this as a chance to critique broader banking regulations, including those aimed at preventing money laundering.

Several Republicans, including Sen. Kevin Cramer from North Dakota, have sponsored a bill, the Fair Access to Banking Act, which would mandate that banks, payment networks, and other financial service providers conduct business with “any person who is in compliance with the law.” Cramer stated he intends to reintroduce the bill next year while also pursuing changes through administrative regulations.

“My primary goal is to reintroduce the bill, build a coalition of support, and collaborate with the Trump administration on rulemaking as soon as possible,” he expressed. “The coalition is expanding as more individuals and industries face debanking issues.”

The conversation surrounding debanking has been heating up since last year, extending beyond just the crypto sector. Industries such as pawn shops, firearms manufacturers, and mining companies have joined the chorus, claiming banks are discriminating against them. Even Muslim charities and individuals connected to the January 6 riots have alleged they’ve been targeted for political reasons.

These allegations echo the historical context of an Obama-era initiative called “Operation Choke Point,” which sought to pressure banks to cut ties with payday lenders and other deemed risky financial services. Some in the crypto space are now dubbing the current wave of debanking as “Operation Choke Point 2.0.”

Industry insiders claim that the pressure applied by regulators has largely been informal, lacking any explicit commands to sever ties with crypto. However, there have been documented guidelines. In January 2023, shortly following federal charges against FTX’s Sam Bankman-Fried, three federal agencies—the Federal Reserve, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency—advised banks to minimize their risks associated with crypto activities.

“It’s vital that the risks associated with the crypto-asset sector don’t seep into the banking system,” the agencies declared in a joint statement.

In a recent move, the crypto exchange Coinbase released an array of letters it received after suing the FDIC last year, revealing that the agency had instructed banks to “pause” or refrain from rolling out various services.

Paul Grewal, Coinbase’s chief legal officer, contended that the FDIC may be acting unlawfully, saying, “There’s no statutory authority for the FDIC to say, ‘We don’t like a particular industry.’ Today, it’s crypto. Tomorrow, it could be any industry.”

The FDIC has, however, denied any targeted action against crypto startups or other customer classes. They maintain that banks aren’t prohibited or discouraged from servicing any specific group or type of client.

The FDIC’s critique also extends to some crypto firms that allegedly misrepresented their products as eligible for FDIC deposit insurance coverage, according to a 2022 agency advisory.