Source: Cointelegraph Original: "{title}"
Despite recent progress in policy, the issue of the cryptocurrency industry struggling to access banking services continues to worry many insiders.
In recent years, financial services companies and banks have typically refused to serve cryptocurrency companies due to concerns over trust risks, reporting responsibilities, and reputational risks, a phenomenon known as "de-banking."
The United States and Australia are working to eliminate these barriers through legislation. In the U.S., lawmakers have repealed guidelines that made it difficult for banks to custody crypto assets, as well as those claiming that cryptocurrencies pose "reputational risks" to banks. In Australia, the Labor Party has introduced a bill aimed at creating a legal framework for cryptocurrencies, providing banks with the clarity needed to interact with the cryptocurrency industry.
Despite these substantial efforts, some observers in the crypto industry say the issue of de-banking is far from over.
The cryptocurrency industry has long criticized "Operation Chokepoint 2.0," a nickname for a series of policies that restricted the growth of the cryptocurrency sector during former President Joe Biden's administration. These included measures that made it harder for cryptocurrency companies to access banking services.
Many of these policies were already repealed or altered early in Trump's second term. The first was the repeal of Staff Accounting Bulletin No. 121, which required banks providing crypto custody services to list them as liabilities on their balance sheets, making it difficult for banks to find a reasonable justification for offering such services.
The government also appointed Rodney Hood as the new director of the Office of the Comptroller of the Currency (OCC). Dennis Porter, CEO of the Bitcoin policy organization Satoshi Action, told Cointelegraph that under Hood's tenure, the OCC has indicated that banks can offer crypto-related services such as custody, stablecoin reserves, and blockchain participation.
"This opens the door for traditional financial institutions to more broadly adopt digital asset technology and custody services, marking a significant shift in how banks interact with cryptocurrencies," he said.
Despite these advancements, Caitlin Long, founder and CEO of Custodia Bank, stated on March 21 that the de-banking issue may persist until 2026.
Long noted that the Federal Reserve's bipartisan board "is still controlled by Democrats," implying that the Democratic Party holds a more skeptical view of cryptocurrencies. Long claimed that "currently, two crypto-friendly banks are under Federal Reserve review, with an army of examiners, including those from Washington, almost suffocating these banks."
Long pointed out that Trump won't be able to appoint new Federal Reserve governors until January next year, meaning that despite other agencies potentially being more crypto-friendly, obstacles still exist.
The grassroots crypto advocacy organization Stand With Crypto, initiated by cryptocurrency exchange Coinbase and expanded to the U.S., U.K., Canada, and Australia, stated, "In Australia, de-banking is quietly excluding innovators and entrepreneurs, particularly in the cryptocurrency and blockchain space."
In a post on X, the organization claimed that de-banking has led to "reputational damage, loss of revenue, increased operational costs, and the inability to launch or maintain services." It also claimed this has forced some companies to relocate overseas.
To address these issues, the ruling center-left Labor Party in Australia has proposed a new set of laws for the cryptocurrency industry. These amendments to the existing financial services laws aim to tackle the de-banking problem facing the country's cryptocurrency sector.
The Australian Treasury stated that its new cryptocurrency regulations have four priorities. Source: Australian Treasury
Edward Carroll, head of global markets and corporate finance at Australian crypto platform MHC Digital Group, told Cointelegraph that the decisions regarding de-banking in Australia "are not the result of regulatory directives."
"Instead, they seem to stem from a general sense of risk aversion due to the lack of a clear regulatory framework."
Carroll is optimistic about the Labor Party's proactive stance. The major party "shows a shift in sentiment and a shared commitment to establishing formal cryptocurrency regulation."
"We hope this will give banks the confidence to re-engage with compliant cryptocurrency businesses," he said.
According to Morva Rohani, executive director of the Canadian Web3 Council, in Canada, "de-banking remains a serious and ongoing challenge facing the Canadian cryptocurrency industry."
"While some companies have successfully established relationships with banking partners, many still face account closures or denials, with little explanation or recourse," she told Cointelegraph.
Although the de-banking behavior is not overt, financial institutions' interpretations of anti-money laundering and know-your-customer (KYC) regulations "create a risk-averse environment where banks weigh compliance and reputational issues against the relatively low revenue potential from cryptocurrency clients."
According to Rohani, the end result is a systemic de-banking issue for the digital asset industry.
However, unlike the U.S. and Australia, the Canadian crypto industry may struggle to find relief in the short term. The leading Liberal Party candidate for Prime Minister, Mark Carney, who has a more skeptical attitude towards crypto, himself holds doubts about cryptocurrencies.
Polls show Carney maintaining a lead. Source: Ipsos
Carney stated that the future of currency lies more in "central bank stablecoins," also known as central bank digital currencies.
Rohani noted that "a comprehensive legislative solution to de-banking has yet to be implemented." "A more structured approach is needed, including mandatory disclosure of account termination reasons and regulatory oversight," she said.
On the other side of the de-banking debate, some claim that the "problem" of de-banking cryptocurrencies is a non-issue or that cryptocurrency companies are pursuing the regulatory tools they need.
Molly White, author of "Web3 Is Going Just Great" and the "Citation Needed" newsletter, pointed out that at least in the U.S., cryptocurrency companies simultaneously claim to be victims of de-banking while praising Trump's efforts to end de-banking protections.
In a February 14 article, White stated that the cryptocurrency industry has "hijacked" the discussion around de-banking, which includes legitimate concerns about access to financial services, especially regarding discrimination based on race, religious identity, or industry affiliation.
She claimed that the cryptocurrency industry uses de-banking as a means to divert attention from legitimate regulatory investigations into their compliance efforts.
Notably, Coinbase CEO Brian Armstrong praised the efforts led by Elon Musk's Department of Government Efficiency (DOGE) to dissolve the Consumer Financial Protection Bureau (CFPB).
One of the CFPB's responsibilities is to investigate de-banking complaints. However, when DOGE instructed the agency to cease all operations, Armstrong called it "100% the right decision" and raised questions about the agency's constitutionality.
Whether the industry's concerns about de-banking stem from legitimate discrimination or attempts at regulatory capture, cryptocurrency companies are developing temporary solutions.
Porter stated that as an alternative to banking services, "many cryptocurrency companies are using stablecoins as their primary tool for managing finances," while others are collaborating with "small regional banks or specialized trust companies that are open to digital assets."
Rohani noted that this "patchwork of relationships" may increase operational costs and risks, and "is not a sustainable long-term growth solution, nor does it build a competitive, regulated industry."
Porter concluded that these alternative banks may actually strengthen the industry's position, suggesting they could "continue to evolve into fully integrated relationships with traditional financial institutions, further solidifying the role of cryptocurrencies in mainstream finance."
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