Live hearing coverage – Investigating the real impacts of debanking in America

The US Senate Committee on Banking, Housing, and Urban Affairs is holding a hearing this Wednesday. The committee is examining allegations that financial institutions have unfairly denied banking services to citizens and businesses associated with the crypto industry. 

The “Investigating the Real Impacts of Debanking in America” hearing features testimonies from Anchorage Digital CEO Nathan McCauley and Davis Wright Tremaine LLP partner Stephen Gannon. 

Others include Old Glory Bank CEO Mike Ring. Lastly, we have Brookings Institution Senior Fellow Aaron Klein.

The committee, chaired by Senator Tim Scott, is focused on uncovering whether banks unilaterally froze accounts tied to crypto. Reports have it that they restricted access to financial services for crypto-related businesses during the Biden administration. 

Scott, a South Carolina Republican who recently took over leadership of the committee, said such actions represent an abuse of regulatory power.

Committee starts ‘debanking’ investigation

“In this country, access to credit is one of the cornerstones of building your American dream. It is disheartening to hear stories about financial institutions cutting off services to digital asset firms, political figures, and conservative-aligning individuals and businesses,” said Tim Scott in his opening remarks.

In attendance was Senator Elizabeth Warren, who echoed Scott’s sentiments, saying that people shouldn’t be denied banking services regardless of their political views. 

“My staff identified 11,955 complaints about debanking, and this number only includes people who took the time to file complaints only in the last three years. All of these complaints reported similar things, no warnings, no explanation, and no chance to dispute or appeal,” remarked Warren.

Senator Warren also mentioned that her staff found four banks, Bank of America, Wells Fargo, JP Morgan, and CitiBank, accounted for half of the complaints her staff received.

“President Donald Trump was onto something when he criticised Bank of America for its debanking practices.”

When Anchorage Digital CEO McCauley was asked to give his testimony, he revealed the grim experience that his company had:

“In June 2023, we received a call from the bank asking us to meet with them […]  We were told our account will be closed in 30 days because they were uncomfortable with our crypto clients and transactions [then] they refused to give us any further explanation.”

McCauley mentioned that his financial firm is federally approved to operate within the US, but it was ironic how other banks denied them services. When asked by Chairman Scott about the extent of debanking in the crypto industry, he answered, “To say this is pervasive is an understatement.”

In the second testimony, Davis Wright Tremaine partner Stephen Gannon told the committee that banks were closing down accounts wrongfully on “strategically ambigious” grounds. Gannon said that if the problem of regulatory overreach is not solved, “there will be an Operation Chokepoint 3.0.”  

Senator Katie posed a query to Gannon asking about the law that President Trump introduced in his first term, which was meant to solve the issue of banks preventing individuals from accessing financial services. The attorney confirmed that the legislation was revoked by former President Biden on January 20, 2021, through an executive order.

In the hearing, Senator Scott called out the Biden administration’s regulatory approach. The approach to debanking does not sit well with American principles of fairness and equity. 

“Debanking is un-American—every legal business deserves to be treated the same regardless of their political beliefs,” Scott reiterated. 

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