Government Pressure Fuels U.S. Debanking Wave — Here’s What It Means for Crypto

When banks shut the doors, look who's holding the keys.

A growing trend of financial exclusion—dubbed 'debanking'—is sweeping across the United States, and new analysis suggests federal pressure is a primary driver. Businesses, particularly in emerging sectors like digital assets, are finding their accounts abruptly closed, lines of credit frozen, and banking relationships terminated without clear explanation.

The Invisible Hand… With a Government Glove

It's not just risk-averse compliance officers making these calls. Behind the scenes, guidance and scrutiny from federal agencies are pushing traditional banks toward ultra-conservative stances. The result? A de facto blockade on entire industries deemed too complex or novel for legacy finance's comfort zone—a classic move of regulatory pressure without official policy.

Crypto's Banking Paradox

This creates a brutal paradox for the cryptocurrency sector. On one hand, regulators demand unprecedented levels of transparency and compliance. On the other, the very banking infrastructure needed to operate compliantly is being withdrawn. It forces innovation into the shadows or offshore—exactly the opposite outcome of stated regulatory goals. Some might call that a feature, not a bug.

The High Cost of Financial Exclusion

Beyond crypto, the debanking ripple effect threatens legal cannabis businesses, money transmitters, and other fintech innovators. It stifles economic growth, fuels the unbanked population, and ironically, can push transactions toward less transparent avenues. The old guard protects its moat, while startups drown in the ditch—all in the name of safety, of course.

A System Protecting Itself

At its core, this isn't just about risk management; it's about control. The traditional financial system, feeling the heat from decentralized challengers, uses compliance as the perfect blunt instrument. Why compete with innovation when you can just cut off its oxygen? It's the banking equivalent of saying 'talk to the hand'—if the hand is wearing a government-issued badge.

So, while Wall Street reports another record quarter off of fees and fractional reserve magic, the next generation of finance is left knocking at the door. The message is clear: innovate elsewhere. Unless, of course, you're 'too big to fail'—then the rules, and the banking services, are always negotiable.

Government pressure dominates debanking despite political and religious claims

Anthony emphasized that debanking can take many different forms, such as operational, where a bank decides to close a customer’s account because it is no longer in the bank’s best interests. Debanking can also be driven by religious or political reasons, where a financial institution closes an account solely because of a political or religious belief or affiliation.

He further explained that debanking can be driven by the government, where the government presses a financial institution to close a customer’s account.

Nicholas Anthony, citing the public data, claimed that governmental debanking is the biggest problem. He claimed that the bulk of cases have involved government intervention in the market through direct or indirect directives to banks on how to conduct their operations over time. In the report, He revealed that the public is aware of it.

Although the Republican members of Congress had presented legislation aimed at limiting the activities of private companies, Anthony revealed that 72% of conservative residents believed that government intrusion was the primary problem.

That perception has also begun to shape policy responses at the federal level, particularly under the TRUMP administration.

The U.S President Donald Trump administration has addressed debanking by issuing executive orders on the subject and hiring more pro-crypto executives to organizations like the Securities and Exchange Commission (SEC). However, Anthony argued that the Bank Secrecy Act should be changed, confidentiality rules should be repealed, and Congress should permanently discontinue reputational risk regulation.

“Doing so WOULD reduce the incentives to debank, expose how widespread debanking has become, and cut out the tools that the government has used to pressure banks and other financial institutions.”

–Nicholas Anthony, an Analyst at the Cato Institute.

According to Anthony, Congress should repeal secrecy regulations that prohibit banks from providing explanations for account closures, abolish reputational risk regulations, and amend the Bank Secrecy Act if it wishes to prevent debanking. 

He maintained that the existing system essentially transforms financial institutions into law enforcement agencies, giving them powerful incentives to cut off clients to reduce regulatory risk. Anthony suggested that Congress and state legislators should oppose proposals to require account access to transform banks into utility services.

Crypto debanking fueled by regulation

For years, cryptocurrency companies have faced account closures and banking service denials. Many in the industry have conjectured that these measures are a part of a policy-driven attempt to stifle the digital assets sector, especially by the Biden administration.

For instance, Anthony cited the Federal Deposit Insurance Corporation, also known as the FDIC, which instructed financial institutions to cease engaging in cryptocurrency-related activities through private letters. 

“Furthermore, the agency failed to provide a timeline or follow up with those financial institutions. So, in practice, these letters were effectively termination orders,” Anthony added.

Additionally, he gave the example of how businesses that sent money between the U.S. and Somalia were swiftly debanked in 2015 following “a broad U.S. crackdown on money laundering.”

In an interview with Fox News in December of last year, Jamie Dimon, the CEO of JPMorgan, denied debanking clients because of their political or religious beliefs. He verified that both Democrats and Republicans in the U.S. were equally guilty of using banks to defraud citizens.

The denial came after Houston Morgan, the head of marketing at non-custodial cryptocurrency trading platform ShapeShift, and Jack Mallers, the CEO of the bitcoin Lightning Network payments company Strike, accused JPMorgan of closing his personal accounts without cause in November.

Join a premium crypto trading community free for 30 days - normally $100/mo.