Trump Executive Order Aims to Curb Politicized Debanking in Crypto Sector

Caitlin Long, founder and CEO of Custodia Bank, has provided a detailed analysis of U.S. President Donald Trump’s recent executive order targeting “politicized or unlawful debanking,” a practice that has historically discouraged or prevented banks from doing business with certain legal sectors, particularly in cryptocurrency [1]. Issued on August 7, 2025, the order aims to prevent regulatory pressure on financial institutions to cut ties with businesses operating within the bounds of the law, and it introduces a new framework to address what the administration calls unfair and politically motivated banking practices.

A key element of the executive order, according to Long, is the appointment of the Small Business Administration (SBA) as an independent overseer of debanking issues. This move signals a clear lack of confidence in the current federal banking regulators—the FDIC, the Federal Reserve, and the Office of the Comptroller of the Currency—suggesting they may lack the independence or capacity to fairly address politically influenced actions [1]. The SBA, traditionally a non-bank regulatory body, will now play a central role in monitoring and enforcing the new guidelines, adding a layer of external oversight to the process.

The appointment of Kelly Loeffler, a well-known Bitcoin advocate and former CEO of Bakkt, to lead the SBA further underscores the administration’s commitment to the crypto industry. Loeffler’s background in blockchain and institutional trading experience makes her a strong candidate to champion the interests of crypto firms and ensure that the SBA approaches its new responsibilities with a clear understanding of the sector’s challenges [1].

Long also highlighted concerns over the political leanings of staff at major banking regulators, citing contribution records showing that a significant majority of FDIC and Fed employees have donated to Democratic candidates in recent years, with as high as 92% in 2024 [1]. This has raised questions about whether regulatory actions against crypto-related businesses may have been influenced by partisan agendas, particularly under the previous administration.

The executive order itself defines “politicized or unlawful debanking” broadly, focusing on the refusal of service based on a business's legal activity rather than naming any specific industry. This language is designed to ensure that banks cannot discriminate against businesses solely based on their sector, including crypto, as long as they remain in compliance with the law [1]. Long emphasized that this shift in language reflects a broader policy intent: to protect the rights of financial institutions and prevent political interference in banking decisions.

Custodia Bank, which previously faced debanking pressures due to its crypto business despite a clean compliance record, has become a case study for the order’s potential impact. Long argues that the true test of the executive order will be whether banks that previously cut ties with Custodia and similar crypto firms are required to reinstate those relationships [1]. The success of the policy, she says, will ultimately depend on tangible outcomes in terms of banking access for the crypto industry.

The order is part of a broader series of crypto-friendly initiatives under the Trump administration, including relaxed rules on institutional access to digital assets and expanded cryptocurrency options in retirement accounts. These actions reflect a strategic shift toward promoting innovation in financial services and positioning the U.S. as a leader in the global digital economy [1].

While the White House has framed the initiative as a step toward a more equitable and innovative financial system, the response from regulatory and financial circles has been mixed. Some analysts view it as necessary corrective action, while others caution that the complexities of regulatory compliance and market dynamics may limit the order’s effectiveness [1]. Nonetheless, the appointment of an independent body to oversee debanking issues marks a significant departure from previous approaches and may lead to more transparent and fair practices in the future.

As the crypto sector continues to navigate regulatory uncertainties, the implementation of this executive order could serve as a turning point in how digital assets are integrated into the mainstream financial system. With key industry figures like Long actively shaping the policy narrative, the coming months may see further developments in the regulatory landscape.

Source: [1] Custodia Bank founder Caitlin Long dives into Trump’s debanking executive order (https://cryptoslate.com/custodia-bank-founder-caitlin-long-dives-into-trumps-debanking-executive-order/)