The U.S. Senate held hearings this week on whether the traditional banking industry has debanked accounts connected to cryptocurrency. While both Republicans and Democrats agree that debanking is a real problem, their approaches to a solution differ significantly.
The crypto industry maintains that federal regulators have quietly supported its debanking, though there is no definitive proof. Nathan McCauley, CEO and Co-Founder of Anchorage Digital, a crypto platform, testified during the hearing that his company lost its bank account and that dozens of banks subsequently refused to do business with him.
The Republican side, led by Sen. Kevin Cramer (R-ND), supports the Fair Access to Banking Act, which prohibits banks from categorically discriminating against legal industries. The Democratic side, spearheaded by Sen. Elizabeth Warren (D-Mass.), wants the Consumer Financial Protection Bureau (CFPB) to maintain oversight of the banking industry to ensure fairness.
Conflating the Issues
Both parties seem eager to steer the discussion toward issues only loosely related to crypto. Democrats argued that debanking crypto aligns with the unbanking of low-income and minority bank customers, a cause the CFPB has been fighting against.
During the hearing, Warren noted: “I know that the Consumer Financial Protection Bureau is a favorite whipping boy of Republicans on this committee, but the CFPB is the main agency in our government that is actively working to stop unfair debanking.”
Meanwhile, Cramer linked the issue to the ongoing complaint that banks have been hostile to conservatives—a talking point that President Trump has been pushing. Cramer said that bank presidents have told him they want to remove “political pressure from the regulator they fear, or the political movement of the day, or the activist investors trying to impose their values.”
“For the crypto and digital asset market, the issue of debanking is critical because it means a lack of access for crypto companies to traditional financial services like payment rails,” said James Wester, Co-Head of Payments at Javelin Strategy & Research. “Where the topic has become cloudy is that debanking is seen by conservatives as a political, not just a crypto, issue. Meanwhile, those on the left are conflating debanking with a lack of access to retail banking services by low income or minority consumers.”
A Nonpartisan Resolution
Until recently, crypto was not viewed as a partisan issue, with support and skepticism coming from both sides of the aisle. According to Wester, the resolution to the debanking problem is unlikely to follow a clear political path.
“Ultimately, what the crypto market wants, and needs if it is to succeed in the U.S., is a clear regulatory framework that allows it to work with traditional, regulated financial services,” said Wester. “That will take some bipartisan support, and it does look like that will happen.”
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