On a recent Wednesday, the Office of the Comptroller of the Currency (OCC) unveiled findings that could reshape discussions on financial regulations, particularly regarding the phenomenon known as crypto debanking. This has sparked renewed concerns, often referred to as “Operation Chokepoint 2.0,” which has implications for the broader financial landscape.
The supervisory analysis evaluated nine major national banks that fall under the jurisdiction of the OCC, including industry giants like JPMorgan Chase, Bank of America, Citibank, Wells Fargo, US Bank, Capital One, PNC Bank, TD Bank, and BMO Bank.
‘Concerning Banking Practices’
The initial findings from the OCC shed light on disturbing practices that have emerged: between 2020 and 2023, these institutions appeared to discriminate against customers based on lawful business activities.
Specifically, a troubling trend surfaced where these banks enacted policies that limited access to financial services, often imposing additional scrutiny and heightened approval processes for particular client groups.
Some banks enacted restrictions on entire sectors, including crypto, driven by the belief that these activities were “inconsistent with [the bank’s] values,” despite them being entirely legal.
Industries impacted by these restrictive policies encompassed oil and gas extraction, coal mining, firearms, the private prison sector, tobacco and e-cigarettes, adult entertainment, and prominently, digital assets.
The OCC highlighted that numerous banks imposed severe limitations on crypto activities, primarily due to apprehensions regarding financial misconduct.
These troubling practices were found consistently among the banks analyzed, leading Comptroller Jonathan V. Gould to express his discontent with the situation, stating:
It is regrettable that the largest banks in our nation would employ these detrimental debanking practices, viewing them as a rightful use of their government-bestowed charters and market influence.
Gould remarked that while some policies were publicly communicated, several banks contended that they were not engaged in debanking activities.
He reaffirmed the OCC’s dedication to rooting out practices that could “weaponize finance,” whether such actions originated from regulatory bodies or the banks themselves.
Encouraging National Banks to Embrace Crypto Transactions
The OCC also revealed that it continues to scrutinize “thousands of complaints” regarding allegations of political and religious bias in debanking, planning to share these insights “in due course.” The aim is to hold banks responsible and prevent illegal debanking practices from becoming the norm.
This development follows a recent communication from the banking regulator allowing national banks to engage in “riskless principal transactions” involving cryptocurrencies. This framework enables national banks to buy and sell cryptocurrencies on behalf of their clients, creating a level of stability and safety in the transactions.
By implementing this new structure, customers can engage in crypto activities through well-established national banks, facilitating a more regulated environment compared to exchanges that function with less rigorous oversight.
Featured image provided by DALL-E, with chart data sourced from TradingView.com
