Source: Cointelegraph.com NewsThe crypto industry\u2019s inability to access banking services still concerns many industry observers despite recent policy victories.
\nIn past years, financial services firms and banks concerned about fiduciary risk, reporting liabilities and reputational risk often would refuse to offer service to crypto firms \u2014 i.e., \u201cdebanking\u201d them.\u00a0
\nLegislative efforts in the United States and Australia are attempting to remove these barriers for the crypto industry. In the former, legislators repealed guidelines that made it difficult for banks to custody crypto assets, as well as those stating that crypto carried \u201creputational risk\u201d for banks. In the latter, the Labor Party has introduced a bill to create a legal framework for crypto, giving banks the clarity they need to interact with the crypto industry.
\nDespite these tangible efforts, some crypto industry observers say that the crypto\u2019s debanking problem is far from over.\u00a0
\nUS crypto execs say debanking is still an issue\u00a0
\nThe crypto industry has long decried \u201cOperation Chokepoint 2.0,\u201d its nickname for a suite of policies that they claim constrained the crypto industry from growing under the administration of former President Joe Biden. Among these were measures making it more difficult for crypto firms to access banking services.\u00a0
\nThe early days of the second administration of President Donald Trump have seen many of these repealed or changed. One of the first was the repeal of Staff Accounting Bulletin 121, which required banks offering custody for customers\u2019 cryptocurrencies to list them as liabilities on their balance sheets \u2014 this made it very difficult for banks to justify offering such services.
\nThe administration also appointed a new head of the Office of the Comptroller of the Currency (OCC), Rodney Hood. Dennis Porter, CEO of the Bitcoin-focused policy organization Satoshi Action, told Cointelegraph that under Hood\u2019s tenure, the OCC has already said banks can offer crypto-related services like custody, stablecoin reserves and blockchain participation.
\nRelated: Atkins becomes next SEC chair: What\u2019s next for the crypto industry
\n\u201cThis opens the door for broader adoption of digital asset technology and custodial services by traditional financial institutions, signaling a major shift in how banks engage with crypto,\u201d he said.
\nDespite these victories, Caitlin Long, founder and CEO of Custodia Bank, said on March 21 that debanking is likely to remain a problem for crypto firms into 2026.
\nLong said the non-partisan board of governors of the Federal Reserve is \u201cstill controlled by Democrats,\u201d alluding to Democrats\u2019 more skeptical stance on crypto. Long claimed that \u201cthere are two crypto-friendly banks under examination by the Fed right now, and an army of examiners was sent into these banks, including the examiners from Washington, a literal army just smothering the banks.\u201d
\nLong noted that Trump won\u2019t be able to appoint a new Fed governor until January, meaning that, while other agencies may be more crypto-friendly, there are still roadblocks.\u00a0<\/p>\n
Australia\u2019s Labor Party to create crypto framework
\nStand With Crypto, the \u201cgrassroots\u201d crypto advocacy organization started by Coinbase that has spread to the US, UK, Canada and Australia, said that \u201cin Australia, debanking is quietly shutting out innovators and entrepreneurs \u2014 particularly in the crypto and blockchain space.\u201d
\nIn a post on X, the organization claimed that debanking results in \u201creputational damage, loss of revenue, increased operational costs, and inability to launch or sustain services.\u201d It also claimed that it forces some companies to move offshore.\u00a0
\nIn response to these concerns, the ruling center-left Labor Party in Australia has proposed a new set of laws for the cryptocurrency industry. The changes to current financial services law seek to tackle the issue of debanking in the country\u2019s cryptocurrency industry.
\nAustralia\u2019s Treasury says its new crypto regulations have four priorities. Source: Australian Department of the TreasuryEdward Carroll, head of global markets and corporate finance at MHC Digital Group \u2014 an Australian crypto platform \u2014 told Cointelegraph that in Australia, debanking decisions were \u201cnot the result of regulatory directives.\u201d
\n\u201cRather, they appear to stem from a more general sense of risk aversion due to the current lack of a clear regulatory framework.\u201d
\nRelated: US gov\u2019t actions give clue about upcoming crypto regulation
\nCarroll was optimistic about the Labor Party\u2019s proactive stance. The major political parties were \u201cshowing a shift in sentiment and a shared commitment to establishing formal crypto regulation.\u201d\u00a0
\n\u201cWe are hopeful that this will give banks the confidence to reengage with crypto businesses that meet compliance standards,\u201d he said.<\/p>\n
Canada unlikely to relieve crypto firms
\nIn Canada, \u201cdebanking remains a serious and ongoing challenge for the Canadian crypto industry,\u201d according to Morva Rohani, executive director of the Canadian Web3 Council.
\n\u201cWhile some firms have successfully established relationships with banking partners, many continue to face account closures or denials with little explanation or recourse,\u201d she told Cointelegraph.\u00a0
\nWhile debanking actions aren\u2019t explicit, financial institutions\u2019 interpretation of Anti-Money Laundering and Know Your Customer regulations \u201ccreates a risk-averse environment where banks weigh compliance and reputational concerns against the relatively low revenue potential of crypto clients.\u201d
\nThe end result, per Rohani, is a systemic debanking problem for the digital assets industry.
\nBut unlike in the US and Australia, the Canadian crypto industry may not find relief anytime soon. Prime Minister Mark Carney, whose more crypto-skeptic Liberal Party is surging in the polls ahead of the April 28 snap elections, is himself a crypto-skeptic.
\nPolls show Carney firmly in the lead. Source: IpsosCarney has stated that the future of money lies more in a \u201ccentral bank stablecoin,\u201d otherwise referred to as a central bank digital currency.
\nRohani said that \u201cno comprehensive legislative solution has been implemented\u201d as regards to debanking. \u201cA more structured approach, including mandated disclosure of reasons for account termination and regulatory oversight, is needed,\u201d she said.<\/p>\n
Critics claim crypto is \u201chijacking\u201d the debanking issue Source: Cointelegraph.com NewsThe crypto industry\u2019s inability to access banking services still concerns many industry observers despite recent policy victories. In past years, financial services firms and banks concerned about fiduciary… <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[],"_links":{"self":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/127214"}],"collection":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=127214"}],"version-history":[{"count":0,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/127214\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=127214"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=127214"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=127214"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nThere is another side to the debanking debate, which claims that crypto\u2019s debanking \u201cproblem\u201d is a non-issue or a vehicle for crypto firms to get what they want in terms of regulation.\u00a0
\nMolly White, the author of Web3 Is Going Just Great and the \u201cCitation Needed\u201d newsletter, has noted that, in the US at least, crypto firms have claimed to be victims of debanking while lauding Trump\u2019s efforts to end protections for debanking at the same time.
\nIn a Feb. 14 post, White stated that the crypto industry had \u201chijacked\u201d the discussion around debanking, which contains legitimate concerns regarding access to financial services \u2014 particularly regarding discrimination due to race, religious identity or industry affiliation.\u00a0
\nShe claims the crypto industry has used debanking as a means to deflect legitimate regulatory inquiries into crypto companies\u2019 compliance efforts.\u00a0
\nFurther of note is the fact that Coinbase CEO Brian Armstrong has applauded the efforts of the Department of Government Efficiency (DOGE), with Elon Musk at the helm, to dismantle the Consumer Financial Protection Bureau (CFPB).
\nOne of the CFPB\u2019s responsibilities is to investigate claims of debanking. But when DOGE instructed the agency to halt all work, Armstrong said it was \u201c100% the right call,\u201d in addition to making dubious claims about the agency\u2019s constitutionality.\u00a0
\nIn the meantime
\nWhether the industry\u2019s debanking concerns stem from legitimate discrimination or an attempt at regulatory capture, crypto firms are developing solutions in the interim.\u00a0
\nPorter said that, as an alternative to banking services, \u201cmany crypto companies have leaned on stablecoins as a primary tool for managing finances,\u201d while others have worked with \u201csmaller regional banks or specialized trust companies open to digital assets.\u201d
\nRohani said that this kind of \u201cpatchwork of relationships\u201d can increase operational costs and risks and are \u201cnot sustainable long-term solutions for growth or to build a competitive, regulated industry.\u201d
\nPorter concluded that the banking workarounds could actually strengthen the industry\u2019s position, stating that they may \u201ccontinue evolving into fully integrated relationships with traditional financial institutions, further cementing crypto\u2019s place in mainstream finance.\u201d
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