cryptorisks

Most account closures in the U.S. — a phenomenon known as debanking — are driven more by government pressure than private biases, according to a new report from the Cato Institute. The analysis shows that federal influence over financial institutions is far greater than commonly acknowledged.
What is debanking?
Debanking refers to the sudden and often unexplained termination of accounts — not only by banks, but also by credit unions, crypto exchanges, payment apps, and other financial entities.
Economist Nicholas Anthony explains that debanking typically occurs for one of three reasons:

🔹 Operational grounds, such as the bank no longer wanting to serve a client

🔹 Ideological motives, such as religious or political beliefs

🔹 Government pressure, either direct or indirect
According to Anthony, it is this third category — government-driven closures — that poses the greatest threat.

Hidden Hand: How Washington Influences Account Closures
The Cato Institute warns that U.S. authorities often influence financial institutions behind the scenes, nudging them to drop certain clients. While these closures may appear voluntary, they’re frequently rooted in pressure from federal regulators.
Key findings include:

🔹 72% of conservatives believe the real issue lies in government overreach

🔹 This public sentiment has already begun influencing federal policy, especially during the Trump administration, which issued executive orders on debanking and appointed pro-crypto officials to agencies like the SEC

Legislative Reform Proposed
Anthony argues that the current framework transforms banks into unofficial enforcement arms of federal agencies, incentivizing them to cut ties with clients to reduce regulatory risks.
He proposes three major reforms:

🔹 Repeal secrecy rules that prevent banks from explaining account closures

🔹 Eliminate reputation risk regulations

🔹 Reform the Bank Secrecy Act to protect consumers from arbitrary debanking

Crypto Industry in the Crosshairs
The crypto sector has been particularly vulnerable to debanking. Many firms have found themselves cut off from the traditional banking system — often without warning or justification.
Anthony cites an example where the FDIC (Federal Deposit Insurance Corporation) allegedly sent private letters to banks, instructing them to cease crypto-related activities — with no timeline, meetings, or explanations. In practice, these letters functioned as “termination orders.”
He also references a 2015 incident where money-transfer businesses serving Somalia were rapidly shut out of the banking system after U.S. authorities launched a crackdown on alleged money laundering.

Community Pushback & JPMorgan Allegations
In a December interview with Fox News, JPMorgan CEO Jamie Dimon denied claims that the bank had closed customer accounts due to religious or political views. His statement followed accusations from Jack Mallers (CEO of Bitcoin Lightning app Strike) and Houston Morgan, who said their personal accounts were closed without explanation.

Conclusion: The Invisible Hand of the State
The Cato Institute report paints a worrying picture: financial freedom in the U.S. is increasingly shaped by government intervention, not market forces.
Anthony concludes:
“If Congress fails to act, debanking will become a powerful tool — not just against crypto, but against the very principle of free access to financial services.”

#debanking , #DigitalAssets , #CryptoRisks , #JPMorgan , #SEC

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