Analysis highlights regulatory pressure as main driver of account closures
New research indicates that most debanking incidents in the United States result from government influence rather than individual bank policies. According to report from the Cato Institute, regulatory and legislative pressure has played a central role in account closures affecting political, religious, and crypto-related clients.
Government Pressure Drives Debanking
Cato Institute analyst Nicholas Anthony categorizes debanking into three types: religious or political, operational, and government-driven. The report finds that government debanking—where authorities directly or indirectly pressure banks—is the predominant cause. Direct action includes letters or court orders instructing banks to close accounts, while indirect action leverages regulations and legislation to achieve the same outcome.
Anthony said ;
Federal agencies, including the FDIC, have issued communications to financial institutions urging them to halt crypto-related operations, which in practice have functioned as de facto account termination orders. Crypto firms, including Lightning Network and ShapeShift, have reported account closures and service denials that align with these government pressures.
Anthony emphasizes that Congress must reform the Bank Secrecy Act, repeal confidentiality laws, and end reputational risk regulation to reduce systemic debanking. These steps would increase transparency, limit governmental leverage over banks, and protect individuals and businesses from arbitrary account closures.
The findings suggest that debanking is largely a policy-driven phenomenon rather than a result of discretionary bank practices. Regulatory reform could mitigate the impact on crypto companies, politically active individuals, and other affected groups, creating a more open and predictable banking environment in the United States.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.