TLDR
- Trump signed an executive order prohibiting the “debanking” of crypto-related businesses
- The order instructs regulators to identify and fine institutions engaged in debanking practices
- Banking associations are attempting to block applications from crypto companies including Ripple
- This continues Trump’s pro-crypto stance following campaign promises
- The executive order aims to eliminate the “reputational risk” category used to target crypto companies
President Donald Trump signed an executive order on Thursday that prohibits financial institutions from “debanking” crypto-related initiatives. The order, titled “Fair Banking for All Americans,” directs federal banking regulators to identify and fine institutions that deny services to businesses for political or ideological reasons.
The executive order specifically mentions that “the digital assets industry has been the target of unfair debanking initiatives.” This action aligns with Trump’s campaign promises to support the cryptocurrency sector and reverse what critics called restrictive policies from the Biden administration.
According to the White House, regulators will be required to review complaint data from businesses that were denied banking services. Financial institutions under the Small Business Administration’s oversight will be asked to make efforts to reinstate clients who were unlawfully denied services.
The order also instructs regulators to eliminate the “reputational risk” category from guidance and training materials. Critics have long argued that banks used this category to unfairly target cryptocurrency companies and other industries like gun manufacturers and fossil fuel companies.
This move appears aimed at ending what some in the crypto industry referred to as “Operation ChokePoint 2.0,” an alleged effort during the Biden administration to drive crypto businesses offshore during the 2022 bear market. “The Trump Administration has already ended Operation Chokepoint 2.0 once and for all by working to end regulatory efforts that deny banking services to the digital assets industry,” the White House said in a statement.
Trump’s Pro-Crypto Agenda
The debanking executive order is part of a broader pro-crypto agenda from the Trump administration. On the same day, the White House signed another order that would permit crypto investments in 401K retirement plans.
Trump also nominated Stephen Miran, described as a pro-crypto economist who favors digital asset-friendly interest rate cuts, for an upcoming vacancy on the Federal Reserve Board. These actions further demonstrate the administration’s favorable stance toward the cryptocurrency industry.
The president has appointed pro-crypto officials to key regulatory and law enforcement roles. Under his direction, the U.S. Securities and Exchange Commission has backed away from several lawsuits against crypto companies that were initiated during the Biden era.
The market responded positively to these developments, with Bitcoin rising 2% and Ethereum climbing nearly 6% following the news. This price movement suggests that investors view the administration’s policies as beneficial for the crypto sector.
Banking Industry Pushback
Despite the administration’s efforts to support cryptocurrency businesses, a group of banking associations is actively working to block crypto companies from obtaining banking licenses. According to a letter dated July 17 sent to the Office of the Comptroller of the Currency (OCC), several major banking groups are opposing applications from four digital asset providers, including Ripple and Fidelity.
The American Banking Association, Consumer Bankers Association, National Bankers Association, America’s Credit Unions, and Independent Community Bankers of America jointly argue that “there are significant policy and legal questions as to whether the Applicants’ proposed business plans involve the types of fiduciary activities performed by national trust banks.”
Ripple, the company behind the XRP cryptocurrency, applied for a banking license on July 2. This application came shortly after Circle, creator of the USDC stablecoin, filed to create a national trust bank to manage its stablecoin reserves.
These applications highlight the growing overlap between traditional financial institutions and native crypto firms. The competition across financial services is intensifying as crypto companies expand into territories traditionally dominated by banks.
The GENIUS Act, a U.S. bill to regulate stablecoins and their issuers, was signed into law on July 18, providing a regulatory framework for these digital assets that are increasingly competing with traditional payment systems.
Trump’s executive order comes at a time when the relationship between traditional finance and cryptocurrency businesses continues to evolve, with both cooperation and competition shaping the future landscape of financial services.
