- An upcoming EO from US President Trump targets big banks and other financial institutions debanking customers based on their involvement in crypto or political views.
- The directive imposes penalties on violators.
US President Donald Trump is about to crack down on big banks that have a bias against cryptocurrency companies and “conservative businesses.” The move is a follow-up to his promises during his campaign and early days in office.
Probe and Fines Coming To Banks Debanking Crypto and Conservatives
The Wall Street Journal (WSJ) claimed to have seen the draft executive order (EO). According to the report, it aims to launch a probe on banks suspected of violating the provisions of the Equal Opportunity Act, antitrust laws, or consumer financial protection laws. Additionally, it penalizes entities that have breached the rules with monetary fines, consent decrees, warnings, or other disciplinary measures.
Citing people familiar with the matter, WSJ said Trump will sign the EO as early as this week. The administration may also delay it for fine-tuning of its provisions or if there are any change of plans regarding the implementation of the new rules.
Trump’s upcoming EO particularly targets financial institutions guilty of debanking customers based on their involvement in crypto and political views. WSJ stated that the order didn’t name any potential violators. However, looking back at the president’s previous rants, the Bank of America (BoA) may be one of the major entities that will likely get the brunt of the new directive.
Bank of America in the Crosshairs of Trump
Trump notably accused BoA of either not taking “conservative businesses” or closing their accounts based on their political stance. Moreover, he insinuated that the bank actively participated in Operation Choke Point 2.0.
Operation Choke Point 2.0 is an iteration of the original Operation Choke Point, which specifically denied financial services to targeted industries, including payday lenders, firearms businesses, and other businesses that banks consider to have a high-risk nature or operations. The “2.0” version focuses on stifling innovations and activities in the digital assets sector, particularly crypto.
Meanwhile, debanking or derisking refers to a practice in which banks deny or close their customers’ accounts due to their perceived “high-risk” status, including insufficient funds and suspected involvement in criminal activities. They often justify their decision as compliance with anti-money laundering and anti-terrorism financing laws.
Trump insisted, though, that some financial institutions like BoA have debanked clients for other reasons, such as their political allegiances, and his family had been a victim of such a practice. Ripple CEO Brad Garlinghouse also mentioned in an interview with Coindesk last year that Citibank debanked him mainly due to his prominent status in the crypto industry.
BoA denied closing customers’ accounts based on their political views in an interview with Barron’s.
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