Trump Bans Debanking of Crypto Firms in Executive Order

President Donald Trump signed an executive order on Thursday titled “Fair Banking for All Americans,” which prohibits financial institutions from engaging in the practice of “debanking” cryptocurrency-related businesses. The order mandates that federal banking regulators identify and impose penalties on institutions that deny services to businesses for political or ideological reasons, particularly those targeting the digital assets industry [1].

The executive directive highlights that the crypto sector has been subject to unfair debanking practices, often justified under the vague category of “reputational risk.” The White House emphasized that regulators must eliminate this term from guidance and training materials, as it has been used to disproportionately hinder crypto firms, alongside industries such as gun manufacturing and fossil fuels [1].

This action is part of Trump’s broader pro-crypto agenda, which includes allowing crypto investments in 401K retirement plans and nominating Stephen Miran, a pro-crypto economist, for a position on the Federal Reserve Board. The administration has also shifted regulatory focus by appointing crypto-friendly officials to key roles and withdrawing from several lawsuits against crypto firms initiated under the Biden administration [1].

Market reactions were positive, with Bitcoin rising 2% and Ethereum increasing nearly 6% following the announcement. This response indicates investor confidence in the administration’s regulatory approach [1].

However, the banking industry is not aligned with this policy shift. A coalition of banking associations, including the American Banking Association and the Consumer Bankers Association, is actively opposing applications from crypto firms seeking banking licenses. The groups argue that the proposed business models of companies like Ripple and Fidelity raise significant legal and policy concerns [1].

Ripple submitted a banking license application on July 2, while Circle recently filed to create a national trust bank to manage its stablecoin reserves. These moves signal a growing convergence between traditional finance and crypto-native firms, intensifying competition in financial services [1].

The newly signed GENIUS Act, enacted on July 18, provides a regulatory framework for stablecoins, further shaping the evolving relationship between legacy financial systems and digital assets [1].

Trump’s executive action seeks to counter what some in the crypto industry labeled “Operation ChokePoint 2.0,” an alleged campaign during the Biden administration to force crypto businesses out of the U.S. financial system. The White House stated that the Trump administration has already ended these efforts “once and for all” by removing regulatory barriers to banking services for digital asset firms [1].

Source: [1] Trump Signs Executive Order Prohibiting Debanking of Crypto Companies (https://blockonomi.com/trump-signs-executive-order-prohibiting-debanking-of-crypto-companies/)