Trump Admin Orders Banks to Face Fines for Crypto Account Closures

The Trump administration is moving forward with an executive order that would impose financial penalties on banks that terminate cryptocurrency-related accounts or engage in what critics describe as politically motivated closures [1]. The directive, aimed at addressing concerns over systemic bias against digital asset businesses and their clients, instructs federal banking regulators to scrutinize potential violations of the Equal Credit Opportunity Act, antitrust laws, and consumer financial protection regulations [2]. The order signals a clear policy shift from the previous administration, where crypto businesses faced what some called "Operation Chokepoint 2.0," a regulatory approach perceived as limiting their access to traditional banking services [3].

The proposed measure threatens disciplinary actions—including fines, consent decrees, and other enforcement tools—against banks found to have discriminated against crypto customers. It also reflects a broader effort to eliminate the "reputational risk" assessments previously used by financial institutions to justify account closures. These assessments were often criticized for enabling banks to refuse service based on non-financial concerns, including political or ideological factors [4].

High-profile cases have drawn attention to the growing pattern of account closures. JPMorgan Chase, for example, informed Coinbase CEO Brian Armstrong in December 2023 that it would terminate accounts of individuals whose primary income came from cryptocurrency activities [5]. Sam Kazemian of Frax Finance reported similar treatment, with the bank allegedly stating it would close accounts of anyone whose wealth or income was largely linked to digital assets [6]. Other figures, including Custodia Bank CEO Caitlin Long, Gemini co-founder Tyler Winklevoss, and Bitcoin Foundation’s Charlie Shrem, have also claimed to have faced account closures linked to their cryptocurrency affiliations [7].

The banking industry has defended these actions by citing legal and regulatory risks, particularly those associated with anti-money laundering compliance. Banks argue that their policies are necessary to manage risks and adhere to existing obligations. Bank of America, for example, stated it has “provided detailed proposals and will continue to work with the administration and Congress to improve the regulatory framework” [8]. This response reflects a broader industry stance aimed at balancing regulatory concerns with operational flexibility.

The executive order also highlights the historical tension between traditional banks and the digital asset industry. Banks, which derive much of their revenue from lending and controlling financial transactions, view cryptocurrencies as a threat to their core business model. The peer-to-peer nature of crypto transactions can bypass traditional financial infrastructure, reducing fee income and limiting institutional oversight [9]. However, some banks are beginning to recognize the potential profitability of certain digital asset services, particularly in areas like stablecoin operations, which often require traditional banking partnerships for fiat backing [10].

The regulatory landscape is also expanding beyond U.S. borders. The United Kingdom recently banned a Coinbase advertising campaign that criticized the traditional financial system [11]. This action underscores that cryptocurrency-related regulatory tensions are not confined to the U.S. and raise broader questions about market competition, free speech, and the role of financial institutions in shaping public perception.

The Trump administration’s executive order could mark a turning point in the relationship between banks and the digital asset industry. It seeks to establish a more level playing field by enforcing legal protections against discriminatory banking practices. At the same time, it opens the door to new regulatory debates over the appropriate role of government in overseeing customer service decisions. As the administration moves forward with this initiative, the banking sector will likely continue to push back, emphasizing the need for clear and enforceable regulatory guidelines.

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[1] (https://coinmarketcap.com/community/articles/6891e67fd648e04dc407e0d8/)