debanking – Earlybirds Invest

Debanking executive order installs independent overseer

The first “hidden gem,” according to Long, is that Trump’s debanking executive order installs an independent overseer, highlighting the administration’s reservations with the existing three federal banking regulators, the FDIC, the Federal Reserve (Fed), and the Office of the Comptroller of the Currency (OCC).

Instead, it places the Small Business Administration (SBA), a non-bank regulator, as an independent overseer above these agencies to monitor debanking issues. This looks an awful lot like a lack of faith in existing agencies’ willingness or ability to address political and unfair debanking practices.

The SBA’s leader is a long-time Bitcoiner, Kelly Loeffler

President Trump picked Kelly Loeffler, a former senator, business executive, and known supporter of Bitcoin and the broader crypto industry, to lead the SBA. This appointment speaks volumes in the crypto community, as Loeffler was the CEO of Bakkt, an institutional bitcoin futures platform, before her Senate career.

The decision to place her in charge of monitoring debanking is an indication that this administration is serious about reform and that its trust in the previous regulatory agencies is low.

Political leanings inside the banking agencies

Long highlights the political leanings of staff at agencies like the Fed and FDIC. According to contribution records, a large majority of donations from Fed and FDIC staff went to Democratic candidates in recent elections, with Long placing the figure as high as 92% for Democrats in 2024.

This raises concerns for some that regulatory actions may have been driven by partisan biases, especially given the history of crypto-related “debanking” during the Biden administration.

Definition and scope of ‘politicized or unlawful debanking’

Trump’s debanking executive order defines “politicized/unlawful debanking” broadly, focusing on “lawful business activities” rather than naming crypto or any specific sector. This language means banks can no longer refuse service simply because a business is a crypto firm if it is otherwise in compliance. The order targets not just crypto companies, but any lawful firms that may face political discrimination. As Long points out:

“Banks that refused to serve or debanked lawful crypto companies are on the hook.”

The litmus test: Custodia and other crypto banks

Custodia Bank previously faced debanking after regulators pressured multiple banks to cut ties due to their crypto business, even though the bank had a clean compliance record.

Long asserts that the true test of Trump’s debanking executive order will be whether banks that debanked Custodia (and similar crypto firms) are compelled to reinstate them. The order’s success, then, will be measured by real outcomes in banking access for crypto companies.

“If they reinstate us, then the EO succeeded”

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Coinbase has filed a legal objection to the Federal Deposit Insurance Corporation’s (FDIC) latest attempt to delay the release of key documents related to the alleged debanking of crypto firms.

On April 10, the exchange opposed the FDIC’s request for a 16-day extension in response to a Freedom of Information Act (FOIA) lawsuit.

Paul Grewal, the company’s Chief Legal Officer, called the request “absurd” while emphasizing that the FDIC submitted 13 pages to ask for more time to decide whether it needs even further delays.

He wrote:

“FDIC just filed 13 pages in our FOIA suit asking the Court for another 16 days to decide whether to ask us for … even more delay. As laid out in our response, this is absurd.”

In its court filing, Coinbase accused the FDIC of stalling and failing to meet its obligations under FOIA. The exchange argued that the agency’s redacted documents were so heavily censored that they offered no meaningful insight.

It also challenged the FDIC’s claim that the new response deadline is May 2, stating that the actual due date should be April 16. According to Coinbase, the FDIC has had ample time to respond and is now attempting to sidestep its legal responsibilities by misinterpreting FOIA deadlines.

This legal battle is part of Coinbase’s broader efforts to expose the government’s role in crypto debanking.

Earlier this year, court-ordered disclosures revealed hundreds of pages of internal FDIC documents showing that the agency had pressured US banks to cut ties with digital asset firms.

Some banks were told to halt services to crypto businesses until they received regulatory clearance, while others were warned about reputational risks associated with engaging with the sector.

However, Coinbase believes these disclosures only scratch the surface and the company is extensively pushing for more transparency to understand the full extent of the FDIC’s role in crypto debanking.

Meanwhile, the FDIC has recently taken steps to align more closely with the crypto industry, revoking several anti-crypto regulations and working toward a more transparent framework for US banks engaging with digital assets

Debanking executive order installs independent overseer

The SBA’s leader is a long-time Bitcoiner, Kelly Loeffler

Political leanings inside the banking agencies

Definition and scope of ‘politicized or unlawful debanking’

The litmus test: Custodia and other crypto banks

Mentioned in this article

Mentioned in this article

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