U.S. President Donald Trump is expected to sign an executive order on Thursday, requiring federal banking regulators to identify and penalize financial institutions that have engaged in "debanking" – that is, cutting off banking services to customers for non-financial reasons.
According to Bloomberg, citing a senior White House official, regulators will have to review complaint data, while financial institutions under the supervision of the Small Business Administration (SBA) will be required to restore services to customers who were improperly denied.
The issue of debanking has become a focal point of controversy in American politics. Many groups argue that gun manufacturing businesses or fossil fuel companies have been denied banking services for ideological reasons.
Crypto companies have also repeatedly complained about this situation. Under former President Joe Biden, allegations of a "ChokePoint 2.0" campaign emerged, which was said to aim to force crypto businesses to relocate abroad during the 2022 bear market.
Despite the current Trump administration's differing stance, allegations of debanking continue to surface.
According to Bloomberg, the forthcoming executive order will require regulators to completely remove the term "reputational risk" from guidance and training documents – a concept criticized for being misused to target crypto companies.
Banking associations seek to block the bank license applications of crypto companies
While the Trump administration attempts to eliminate the debanking status, a group of powerful banking associations is trying to prevent crypto companies – including Ripple – from applying for banking licenses.
According to a letter sent to the Office of the Comptroller of the Currency (OCC) dated July 17, associations including: the American Bankers Association (ABA), the American Consumer Bankers Association, the National Bankers Association, the Credit Union Association of America, and the Independent Community Bankers of America have opposed the license applications of four digital asset organizations, including Ripple and Fidelity.
In the letter, these associations argue that the proposed business plans raise many policy and legal issues, particularly regarding whether these companies will engage in fiduciary activities similar to national banks. Additionally, they criticized that the public portions of the license application were insufficient for effective public oversight.
Ripple – the issuer of the XRP cryptocurrency – submitted a bank license application on July 2. This move came just days after Circle – the company behind the USDC stablecoin – also applied to establish a national trust bank to manage stablecoin reserves.
These records show that the boundary between the traditional financial sector and the crypto industry is increasingly blurred, while increasing competition in the financial services industry.
In particular, stablecoin issuers are introducing new payment methods that could threaten the traditional payment infrastructure of banks and credit card companies. The GENIUS Act – legislation regulating stablecoins and their issuing organizations – was officially signed into law on July 18.