.svg)
In a sweeping move aimed at guaranteeing fair access to financial services for all Americans, President Trump has issued an executive order targeting “politicized or unlawful debanking” by financial institutions and federal regulators.
The order condemns practices by some banks and regulators that have allegedly restricted access to banking services based on individuals’ political or religious beliefs, or lawful business activities.
In the text, the President specifically references surveillance and transaction-flagging linked to conservative-leaning customers after the events at the Capitol on January 6, 2021, naming retailers such as Cabela’s and Bass Pro Shops and payment references such as “Trump” and “MAGA”.
The document also criticises “Operation Chokepoint,” a controversial initiative under prior administrations, which the Trump administration has accused of pressuring banks to avoid servicing certain legal industries for political reasons, resulting in the freezing of payrolls and other financial harms.
It states that these actions “undermine public trust in banking institutions and their regulators, discriminate against political beliefs and free expression of those beliefs, and weaponize a politicized regulatory state.”
A dramatic change
The order mandates the following actions:
- Federal banking regulators must remove “reputation risk” and similar language that could encourage politically motivated debanking from their guidance within 180 days.
- The Small Business Administration (SBA) must notify financial institutions guaranteeing loans to identify and reinstate clients denied service due to politicised debanking within 120 days.
- Federal regulators will be compelled to review banks’ past and present practices to identify unlawful debanking, with authority to impose fines or take enforcement actions against offenders.
- The Treasury secretary, in consultation with the White House economic team, will develop a comprehensive strategy within 180 days to further combat politicised debanking, including legislative or regulatory proposals.
The order emphasises that banking decisions must be based solely on “individualized, objective, and risk-based analyses” rather than any sort of political or religious views.
Critics of the approaches under previous administrations have argued that some financial institutions used vague reputational risk assessments to exclude customers for their beliefs, and this new intervention from the President signals a revised federal stance on the matter.
The response from crypto
The Executive Order has attracted a favourable response from those who felt some organisations had been treated unfairly in the past.
Blockchain Association CEO Summer Mersinger said that it was a “historic shift”.
“Ending the discriminatory practice of debanking lawful crypto companies sends a clear message: the era of ‘reputation risk’ being used to justify financial exclusion is over,” she added.
Meanwhile, Crypto Council for Innovation CEO Ji Hun Kim agreed, stating that it was a “critical” step to ensure digital assets are part of the financial system.
“Companies building in this space deserve fair access to banking and financial services. We applaud this Administration’s continued commitment to clear policies that will drive innovation, support everyday investors, and make the US the crypto capital of the world,” he added.
Banking associations have also welcomed the news.
"Today's Executive Order helps ensure all consumers and businesses are treated fairly, a goal the nation's banks share with the Administration,” said a joint statement by the Bank Policy Institute, American Bankers Association, and Consumer Bankers Association and Financial Services Forum.
“Its in banks’ best interest to take deposits, lend to and support as many customers as possible. Unfortunately, regulatory overreach, supervisory discretion and a maze of obscure rules have stood in the way as the E.O. makes clear,” the statement said.
A big shift
The Trump administration and politics in the US generally have become increasingly crypto-friendly, with the passage of legislative frameworks such as the GENIUS Act and clarity from regulators such as the Office of the Comptroller of Currency.
This new executive order is part of that significant policy shift. For crypto firms, which have long faced reputational risk and regulatory uncertainty, the order could be crucial to expanding fair access to banking and payment services, which is integral to supporting their growth and integration into the wider financial system.
For the crypto sector, the order offers several potential benefits. It reduces the risk of politicised debanking, addressing the de-risking many firms have faced from traditional financial institutions.
By requiring regulators to remove discriminatory practices, it may enable a smoother process for crypto companies to open and maintain accounts.
Crypto-related businesses previously denied SBA loan-related banking services may see renewed opportunities for financing, as institutions are required to re-engage and reinstate eligible clients.
The challenge for banks
Banks and money service businesses (MSBs) are set to face greater regulatory scrutiny over so-called debanking practices, following the executive order.
Firms will need to make sure that services are not denied based on political or religious beliefs or lawful business activities, with the risk of fines or enforcement actions for non-compliance.
Their compliance frameworks will need to eliminate vague reputation risk measures, focusing instead on objective assessments tied to genuine financial risk.
Institutions will also need to identify and reinstate customers previously excluded for political reasons, a process that may increase short-term operational costs.
Failure to comply could lead to both legal penalties and, ironically, reputational damage.
