Allegations of Debanking in Crypto Firms Are Now Under Thorough Investigation

Allegations of Debanking in Crypto Firms Are Now Under Thorough Investigation

Key Points:

  • The U.S. House Oversight Committee is investigating allegations of improper debanking in crypto firms.
  • Key industry leaders have reported abrupt closures of their companies’ banking accounts without explanation.

The United States House Committee on Oversight and Government Reform is investigating allegations of “improper debanking” of individuals and organizations involved in cryptocurrency and blockchain technology, potentially influenced by political affiliations.

Read more: President Donald Trump Signs Executive Order Banning Central Bank Digital Currencies in the U.S. 

House Oversight Committee Investigates Alleged Debanking in Crypto Firms

The probe, led by Committee Chairman Rep. James Comer, seeks to understand whether firms faced debanking in crypto under the Biden administration. Debanking refers to the abrupt closure of financial accounts by banks, often with little notice, due to perceived financial risks.

On Friday, Comer sent letters to key figures in the industry, including Coinbase CEO Brian Armstrong, Uniswap Labs CEO Hayden Adams, and Andreessen Horowitz co-founder Marc Andreessen, requesting their testimony on the matter.

The investigation centres on claims that U.S. government agencies, particularly the Federal Deposit Insurance Corporation (FDIC), may have encouraged or influenced financial institutions to restrict access to banking services for crypto companies. This situation has been dubbed “Operation Chokepoint 2.0,” drawing comparisons to a similar initiative under the Obama administration that targeted banks dealing with payday lenders.

Investigation Seeks to Uncover Government Influence on Crypto Access to Banking

High-profile examples of debanking in crypto include accusations from Armstrong and Adams, who assert that their companies were abruptly cut off from banking services without clear explanation. Marc Andreessen, in November, argued that these efforts were aimed at disadvantaging certain tech startups in the crypto space.

In January, FDIC interim Chair Travis Hill acknowledged the agency’s involvement in debanking in crypto but stopped short of confirming the existence of a broader initiative like Operation Chokepoint.

Senator Cynthia Lummis, a strong crypto advocate, has vowed to prevent such initiatives, pledging to take action as the new leader of the Senate Banking Subcommittee on Digital Assets. The House Oversight Committee’s investigation will determine whether financial institutions are independently making these decisions or acting under government guidance.

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