A new report from the Cato Institute finds that most debanking cases in the U.S. are driven by government pressure rather than individual bank policies.
Nicholas Anthony, an analyst at the think tank, outlined three types of debanking in Thursday’s report: religious or political, where accounts are closed due to a customer’s beliefs or affiliations; operational, when banks close accounts because maintaining them is no longer in their interest; and government, when authorities pressure financial institutions to terminate accounts.
“While media and political narratives often frame these closures as political or religious discrimination, our research shows that the majority of debanking cases result from governmental pressure,” Anthony said.
“Based on public evidence, governmental debanking appears to be the most significant issue majority of cases over time can be found where government officials have intervened in the market by either directly or indirectly telling banks how to run their business.”
Crypto companies have long faced account closures and denials of banking services, with many in the industry suggesting these actions are part of a policy-driven effort to curb the digital asset sector, particularly under the Biden administration.
Nicholas Anthony of the Cato Institute explained that government-driven debanking typically occurs in two forms. Direct debanking involves formal actions such as letters or court orders instructing a financial institution to close an account. Indirect debanking occurs when lawmakers use regulations or legislation to pressure banks into terminating accounts.
Anthony cited the Federal Deposit Insurance Corporation (FDIC) sending letters to financial institutions ordering them to halt crypto-related activities as an example of direct government intervention.
“Moreover, the agency did not provide a timeline or follow up with the affected financial institutions, meaning these letters effectively acted as termination orders,” Anthony added.
In December, JPMorgan CEO Jamie Dimon denied that the bank closes accounts based on religious or political affiliations during an interview with Fox News. He also suggested that both major U.S. political parties—Democrats and Republicans—have applied pressure on banks to debank individuals.
The issue has hit the crypto sector particularly hard. In November, Jack Mallers, CEO of Bitcoin Lightning Network payments company Strike, accused JPMorgan of closing his personal accounts without explanation. That same month, Houston Morgan, head of marketing at non-custodial crypto trading platform ShapeShift, reported a similar experience.
Congress could step in
While the Trump administration previously attempted to address debanking through executive orders and by appointing more pro-crypto leaders to agencies like the SEC, Anthony argues that more structural reforms are needed.
He recommends that Congress reform the Bank Secrecy Act, repeal certain confidentiality laws, and permanently eliminate reputational risk regulation.
“Such measures would reduce incentives to debank, reveal the true scale of the practice, and remove the tools the government has used to pressure banks and financial institutions,” Anthony said.
“If Congress wants to bring relief and reduce the debanking phenomenon, it’s time to eliminate the confidentiality that has shrouded the system. It’s time to take the practice of reputational risk regulation off the table. And it’s time to reform the Bank Secrecy Act regime that has deputized financial institutions as law enforcement investigators.”
