TLDR
- Trump signed “Fair Banking for All Americans” executive order prohibiting debanking of crypto companies
- Order targets ending “Operation Chokepoint 2.0” allegations from Biden era that denied banking services to crypto firms
- Federal regulators must identify and fine institutions that engaged in debanking practices
- Banking associations are trying to block crypto companies like Ripple and Fidelity from obtaining banking licenses
- Bitcoin and Ethereum prices rose 2% and 6% respectively following the news
President Donald Trump signed an executive order on Thursday called “Fair Banking for All Americans” that prohibits financial institutions from debanking crypto-related businesses. The order represents a major shift from the previous administration’s approach to digital asset companies.
The executive order directs federal banking regulators to adopt policies preventing “politicized or unlawful debanking.” It specifically mentions that the digital assets industry has been targeted by unfair debanking initiatives.
Under the new rules, regulators must review complaint data to identify institutions that engaged in debanking. Financial institutions under the Small Business Administration will be required to make efforts to reinstate clients who were unlawfully denied banking services.
The order aims to eliminate the “reputational risk” category from regulatory guidance and training materials. Critics argued this category was used to unfairly target crypto companies during the Biden administration.
Trump’s action addresses complaints about “Operation Chokepoint 2.0,” an alleged Biden-era initiative to drive crypto businesses offshore. The crypto industry claimed banks coordinated efforts to deny banking services to digital asset companies during the 2022 bear market.
Banking Industry Pushback
Despite Trump’s pro-crypto stance, powerful banking associations are fighting back. Five major banking groups sent a letter to the Office of the Comptroller of the Currency attempting to block crypto companies from obtaining banking licenses.
The American Banking Association, Consumer Bankers Association, and three other groups targeted applications from Ripple, Fidelity, and two other digital asset providers. They argued the applications lack sufficient detail for meaningful public scrutiny.
Ripple applied for a banking license on July 2, just days after Circle filed to create a national trust bank. These applications highlight growing competition between traditional banks and crypto firms.
The banking associations questioned whether crypto companies’ business plans involve proper fiduciary activities performed by national trust banks. They raised policy and legal concerns about allowing crypto firms into traditional banking.
Market Response and Policy Changes
Bitcoin prices rose 2% following news of the executive order, while Ethereum gained nearly 6%. The market response reflects investor optimism about the administration’s crypto-friendly policies.
Broader Regulatory Shift
The executive order continues Trump’s campaign promises to support the crypto industry. The administration also signed orders allowing crypto investments in 401K retirement plans and nominated pro-crypto economist Stephen Miran to the Federal Reserve board.
The White House stated that the Trump administration has ended Operation Chokepoint 2.0 by working to end regulatory efforts denying banking services to digital assets companies. The Securities and Exchange Commission has backed off several Biden-era lawsuits against crypto companies.
Stablecoin companies have introduced new payment forms that compete with traditional banking infrastructure. The GENIUS Act regulating stablecoins and their issuers was signed into law on July 18.
The executive order represents the latest effort to deliver on Trump’s 2024 campaign promises to the crypto sector. The administration has appointed pro-crypto officials to key regulatory and law enforcement positions.
