De-banking: A personal perspective

Article author: Edward Woodford Article translation: Block unicorn

In a recent conversation on the Joe Rogan Experience, Marc Andreessen (@pmarca) highlighted a worrying trend affecting the financial landscape: debanking. Under pressure from regulators and advocacy groups, financial institutions are increasingly denying banking services to individuals, organizations, and entire industries. I think key points about debanking are missing from the narrative, which are as follows:

0. Overview

A. Agree on a definition of debanking

Debanking is not a binary concept. Instead, it is a general attempt to limit financial services to specific industries, rather than taking a risk-based approach to every player in the field. The fact that Zero Hash and other Tier 1 players in the stablecoin and cryptocurrency space have strong banking partners does not preclude the existence of “unbanking.” Specifically, we hold customer and operational funds at multiple top 20 banks.

The counterargument I have heard is that banks have the right to decide who they serve based on their risk assessment. However, the difference here is:

• The emphasis on specific industries is directly contrary to guidance issued by the OCC (Office of the Comptroller of the Currency), which clearly states that broad, categorical discrimination against businesses engaged in legitimate activities is not permitted.

• The FDIC (Federal Deposit Insurance Corporation) has attempted to unilaterally predetermine the risk profile of banks, rather than allowing banks to determine this for themselves. Regulators setting risk profiles for legitimate businesses goes against the OCC’s long-standing instruction that regulated banks should make deposit account decisions based on the bank’s risk assessment of all customer accounts. This is an extreme form of “implicit regulation” (a term I coined in a recent blog), whereby it is made clear that certain activities will be scrutinized, creating a burden so great that it effectively discourages certain activities that are not prohibited by law.

B. Debanking is a fact

• Of course, the impact of debanking is obvious, and we have had bank accounts closed in a single day, including with partners we have been working with since 2017.

• The scope of the impact is incredible. We were nominated for an award and the nominees dinner for that award was sponsored by a bank. I was disinvited at the request of the bank because “paying for my dinner might cause misunderstandings.”

• We operate a multi-jurisdictional business. The same banks bank all of our non-US subsidiaries, but not our US entities. Same owners, same risk profile.

• Over the last 18 months, approximately 80% of the 120+ banks we proactively approached declined to engage in any substantive discussion (to look at the risk profile in more detail), purely based on the industry we are in.

C. Why should anyone care?

• Is this a rights issue? Banking is essential to modern life (and any business), and arbitrarily denying banking services raises constitutional and ethical concerns.

• Higher fees. Intrinsically distorts the market due to reduced competition.

• Creates concentration risk. The fewer banks that can serve a particular industry, the more risk there is for the customer base.

Andreessen used the term "Operation Choke Point 2.0" (originally coined by @nic__carter), which draws parallels to controversial moves during the Obama administration, when regulators pressured banks to cut ties with legal but politically unpopular industries. Today, this trend has expanded, with industries like crypto being debanked not because of illegal activity, but because of reputational issues or political pressure.

Banking, long considered a neutral utility, has become a battleground for cultural, political, and economic conflict. The question we must ask is: when financial access is weaponized, who decides who can participate in the modern economy?

1. The rise of debanking in the public eye

Since Andreesen’s appearance on November 26, the topic has accelerated:

November 29 — Former PayPal president and Lightspark co-founder David Marcus (@davidmarcus) shared a post about how political pressure killed Meta’s stablecoin project, Libra.

Elon Musk (@elonmusk) reacted to Marcus' post with "wow." Coinbase (@coinbase) CEO Brian Armstrong (@brian_armstrong) shared Marcus’ post, adding: “This makes sense — the government is putting pressure on the banks (again).”

December 4 — U.S. Congressman French Hill (@RepFrenchHill) spoke about the unbanking of the cryptocurrency industry in Congress and pledged to “stop, reverse and investigate Operation Stranglehold 2.0.”

December 4 — U.S. Congressman French Hill (@RepFrenchHill) spoke about the unbanking of the cryptocurrency industry in Congress and promised to “stop, reverse and investigate Operation Stranglehold 2.0.” src="https://img.jinse.cn/7337211_image3.png">

December 6 - Former Silvergate CTO Chris Lane (@D_CentralBanker) shared his experience with regulatory pressure on crypto banks, catching the attention of David Sacks (@DavidSacks), who shared Lane's post and commented: "There are too many stories of people being hurt by killing Operation Stifle 2.0. This needs to be investigated."

December 6 - Court documents filed in a lawsuit against the FDIC reveal letters from the agency asking banks to pause crypto-related activities. “These letters show that Operation Stranglehold 2.0 is more than just some crypto conspiracy theory,” said Paul Grewal (@iampaulgrewal), chief legal officer at Coinbase.

December 10 - The New York Times published an article by Erin Griffith (@eringriffith) and David Yaffe-Bellany (@yaffebellany) analyzing how debanking has quickly become a “political weapon.”

December 19 - U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce (@HesterPeirce) voted against approving a $400 million budget for the Public Company Accounting Oversight Board (PCAOB), expressing concern in comments that the commission was "seeking to prevent regulated entities from providing services to the cryptocurrency industry and its participants or otherwise engaging in cryptocurrencies through regulatory measures." Despite Peirce's opposition, the budget was approved by three other commissioners, including SEC Chairman Gary Gensler.

2. Is banking a right?

Banking is a service provided by private companies. However, in an economy where nearly all transactions rely on financial infrastructure, this service operates much like a utility. Without it, participating in modern life - whether paying bills, collecting wages or obtaining credit - is nearly impossible.

In conversation with Rogan, Andreesen argued that debanking could infringe on constitutional rights. If banking services are essential to economic participation, then access without clear justification — or under opaque political pressure — could amount to a denial of fundamental rights. While there is no explicit right to banking services in the Constitution, legal precedent has recognized that financial activities are closely tied to fundamental rights like free speech and due process.

The basis for these debates lies in cases like Buckley v. Valeo (1976) and Citizens United v. Federal Election Commission (2010). Both rulings emphasized that money, as a medium of expression, is protected by the First Amendment. While these cases centered on campaign finance, they established a principle: The ability to access financial resources is essential to participation in public discourse. If financial services can be denied at will, it amounts to silencing legitimate voices.

The Fifth and Fourteenth Amendments’ due process guarantees offer another perspective: In Goldberg v. Kelly (1970), the Supreme Court ruled that government benefits that are closely tied to an individual’s livelihood cannot be terminated without due process. While banking is provided by private institutions, its vital role in modern life aligns it with a public utility, suggesting that arbitrary denial of banking services may violate due process protections.

The question of financial neutrality, and specifically unbanking, has been tested this year. In NRA v. Vullo (2024), the Supreme Court unanimously ruled that the New York State Department of Financial Services’ superintendent could not use her authority to force banks and insurance companies to sever ties with the NRA. Justice Sonia Sotomayor said that while regulators can express opinions, they cannot force financial institutions to discriminate against legal entities based on political affiliation.

These rulings confirm that financial exclusion—whether due to direct government coercion or indirect reputational pressure—raises major constitutional questions. As Andreessen noted on The Joe Rogan Experience, “Five years from now, there could be a Supreme Court case that retroactively rules that this was all illegal.”

3. Legal Business Is Legal

At its core, debanking raises a simple question: If an entity operates within the law, should it have access to banking services? The answer seems obvious—but the trend toward debanking legal businesses suggests otherwise.

This should be a nonpolitical statement. The Office of the Comptroller of the Currency (OCC) has issued guidance saying it does not allow broad, targeted, categorical discrimination against businesses engaged in legitimate commercial activities.

The exclusion of compliant businesses from essential financial services is a dangerous trend – one that risks embedding subjective bias into the backbone of the modern economic infrastructure. If the financial system chooses which legitimate entities to support, it ceases to be a neutral platform and becomes a tool to enforce a political or cultural agenda.

Fair access is not about forcing banks to take undue risk. It is about ensuring that the financial system remains inclusive and neutral, providing the ability for all legitimate businesses to operate. Without this neutrality, we risk turning the banking industry into a gatekeeping mechanism that stifles innovation and undermines trust in society, thereby undermining trust in one of society’s most critical systems.

4. Zero Hash: A Case Study in Overregulation

At Zero Hash, we’ve experienced these challenges firsthand. While we operate under the highest standards of regulatory compliance—standards that have earned us the trust of more than 75 institutions, including Interactive Brokers, Stripe, and Franklin Templeton—we still face significant hurdles in securing and maintaining banking relationships.

Our broad licensing reflects our commitment to transparency and compliance. We are authorized to conduct business in more than 200 jurisdictions around the world, including all U.S. states and territories. In the U.S., our licenses include:

• New York Bitlicenses: One of the most stringent regulatory frameworks for virtual currency businesses.

• Money Transmitter Licenses (MTLs): Enable us to operate in all 52 U.S. jurisdictions (50 states plus Washington, D.C., and Puerto Rico) and ensure compliance with state requirements for money services businesses.

• FinCen is registered as a Money Services Business (MSB): subject to Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) obligations under federal law.

Even though we have licenses comparable to or better than traditional financial institutions, they still don’t want to work with us. In the past 18 months, we have proactively contacted more than 120 banks, and about 80% of them refused to engage in any kind of substantive discussion, purely for industry reasons. Of the banks that did participate in the discussion, only half conducted due diligence.

This problem is less prevalent in Europe. The international banks that are willing to work with us actively work abroad, but explicitly refuse to work with us in the United States. Ironically, this is the same bank, dealing with the same company, facing the same risk profile - but US regulatory and political factors create barriers that do not exist elsewhere. This disparity highlights the chilling effect of unclear regulatory frameworks and overregulation, which actively hinders innovation in the United States and forces companies to look elsewhere to build the future.

5. The Stakes of Financial Neutrality

Debanking is more than a logistical hurdle — it directly challenges the principles of fairness, freedom, and trust that our financial system is built on. This is not just about cryptocurrencies; it’s about guaranteeing everyone access to modern financial infrastructure.