Crypto among sectors debanked by 9 major banks: US regulator

The recent findings from the Office of the Comptroller of the Currency (OCC) reveal that nine of the largest banks in the United States have limited financial services to the cryptocurrency sector along with other politically sensitive industries. This analysis spans from 2020 to 2023 and raises concerns about the banks' practices in differentiating among customers based on their lawful business activities.

The OCC identifies cryptocurrency as a debanked industry among others

The OCC's preliminary report indicates that the banking institutions have made inappropriate distinctions among customers, particularly impacting sectors such as cryptocurrency, oil and gas, firearms, and adult entertainment. The report suggests that actions taken by these banks may have been influenced by political climates and perceptions of risk associated with certain industries.

Major banks implemented policies limiting access to financial services

According to the OCC, the banks either enforced policies that restricted access to banking services or mandated more rigorous reviews and approvals for customers in these contentious sectors. This trend has raised alarms about the potential discrimination against lawful businesses, particularly in the cryptocurrency space where banks expressed concerns over financial crime.

OCC initiated review following executive order on discrimination in banking

The investigation by the OCC was prompted by an executive order signed by former President Donald Trump, which called for a closer examination of whether banks had engaged in debanking practices based on political or religious beliefs. The findings suggest that the actions of major banks may have been at odds with the principles of fair access to financial services.

Critiques arise regarding the OCC's report and its implications for banks

While the OCC's findings shed light on the banking sector's treatment of cryptocurrency and other industries, several critics argue that the report falls short of addressing the broader context of regulatory pressures that banks face. Analysts point out that agencies like the Federal Deposit Insurance Corporation (FDIC) have discouraged banks from engaging with cryptocurrency firms, complicating the narrative surrounding debanking in this sector. The ongoing inquiry by the OCC could lead to further scrutiny and potential actions from the Justice Department.

This situation highlights the ongoing challenges faced by cryptocurrency businesses in securing banking relationships and the implications for market dynamics as regulatory landscapes continue to evolve.