A Bitcoin Order You Can Bank On
Earlier this month, President Trump issued an executive order guaranteeing fair access to banking services for all Americans, including Bitcoin-related firms that have long been denied services simply for operating in a disfavored industry.
This isn't Trump's first move against debanking. Federal banking agencies have already removed "reputational risk" from their assessments—the buzzword that allowed regulators to pressure banks into shunning digital asset firms, firearms manufacturers, and other politically unpopular industries.
But the August order goes further. It not only requires banks to accept Bitcoin clients going forward, it forces them to make amends for past refusals. Specifically, the order requires banks to "identify and reinstate any previous clients" that were previously "denied services through a politicized or unlawful debanking."
That's important. Under the rules invoked by the previous administration, the government could pressure banks to drop clients, but banks couldn't inform clients why they were being dropped. That secrecy might make sense when cutting off terrorist networks or foreign spy cells, but it makes far less sense when we're talking about Coinbase. Even crypto-skeptic JP Morgan CEO Jamie Dimon complained, "we should be allowed to tell you" what's going on.
Now his wish has been granted. Regulators are making clear they plan to hold banks accountable. Comptroller of the Currency Jonathan Gould has vowed to “commence a review to assess the extent to which the institutions it supervises have or are engaged in politicized or unlawful debanking and take remedial actions if appropriate.” Acting FDIC Chair Travis Hill said he'll do the same.
That's welcome news for digital asset firms, which continue to be debanked despite earlier reforms. Alex Konanykhin, CEO of Unicoin, told Cointelegraph that his company and its subsidiaries "have been de-banked, without explanations, by several banks" including Citibank, Chase, Wells Fargo, City National Bank of Florida and TD Bank. Konanykhin claimed that Unicoin was debanked by four banks this year alone, highlighting how deeply these practices are embedded in compliance culture.
The irony, of course, is that Bitcoin was designed to prevent the very kind of financial censorship to which these firms have been subjected.
But that doesn't mean that Bitcoin is ready to fully replace the fiat system just yet. Miners and node operators will still need to tap electricity grids to power operations, and fiat cash to pay those bills. Bitcoin Treasury Companies still largely need to meet payroll and settle taxes in dollars. And Bitcoin exchanges' raison d'etre is, well, the ability to exchange Bitcoin for other forms of currency, like cash. For now, participation in the Bitcoin economy still requires access to the U.S. banking system.
It's not hard to see why the banks bowed to pressure: blocking Bitcoin wasn't their choice so much as Washington's. But today, the pressure runs the other way, and it comes from the President himself. That doesn't necessarily mean they'll comply, but if they don't, the risks will be a lot more than "reputational."