The White House is drafting an executive order to target financial firms alleged to have terminated services to cryptocurrency companies and conservative organizations.
The potential guideline may penalize banks that refuse because of their political affiliation or crypto involvement. A draft examined by The Wall Street Journal showed that banks found in violation will be liable to fines, suits, or pressure to transform their practices.
The order would instruct federal regulators to vet violations of antitrust, consumer protection, and credit opportunity laws. Even though authorities anticipate the order this week, there is no definitive time since there are internal debates.
Crypto firms and conservatives report account closures
Crypto companies and so-called conservative organizations allege that their bank accounts have been denied services due to political/ ideological reasons. Even with no violation of the law, some reports are being designated as questionable or deleted unreasonably.
One prominent example is the Bank of America, which shut down the accounts of a Christian organization that conducts its business in Uganda. The group asserted that the move was religiously triggered. The bank claimed that it did so according to one of its policies against small businesses beyond the United States.
The draft criticizes this second point because certain banks disclosed customer information to federal officials as part of the Capitol riot investigation. It asserts that banks self-reported suspicious transactions that they suspected were connected with the events of January 6. On the one hand, such a level of control by banks could allow them to be used as political filters against access, giving unfair access.
Instead, several crypto companies report their silent and organized ban under the Biden administration. According to them, the regulators discouraged banks from cooperating with companies working with digital assets, and it is a so-called shadow ban.
Banks defend actions under compliance rules
According to Banks, they have incorporated risk into their decisions, particularly when it involves digital assets. They cite anti-money-laundering regulations and murky federal guidelines as reasons to be wary.
A number of them have revised internal regulations to explain non-discrimination based on political considerations. Still others have been working with Republican attorneys general to assure them of their willingness to play by the rules.
A Bank of America spokeswoman, speaking on behalf of the bank, confirmed that the bank is in support of clear federal guidance. He observed that the institution had made submissions to assist in enhancing the regulatory environment.
Executive order to limit the use of reputational risk
Provided in the draft, the regulators are told to eliminate regulations that apply the concept of reputational risk when making decisions about banking. Critics add that it enables banks to become moral referees. The order seeks to avoid the situation where banks will use their reputation in a bid to refuse services.
It also instructs the Small Business Administration to investigate how banks treat people who inquire about SBA-backed loans. Any changes to the policies may affect thousands of small businesses.
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