Between 2020 and 2023, the nine largest banks in the US limited financial services to industries viewed as politically controversial, such as cryptocurrency, according to preliminary findings from the Office of the Comptroller of the Currency (OCC).
The banking regulator reported on Wednesday that its initial findings reveal major banks “made improper distinctions among customers in providing financial services based on their lawful business activities” over the three-year period.
The OCC indicated that banks either enacted policies to limit access to banking services or mandated increased reviews and approvals before providing financial services to certain clients, although specific details were not disclosed.
The review was initiated after President Donald Trump signed an executive order in August, mandating an inquiry into whether banks had debanked or discriminated against individuals based on their political or religious beliefs.
Crypto issuers and exchanges caught in restrictions
The OCC’s report found that aside from crypto, sectors facing banking limitations included oil and gas exploration, coal mining, firearms, private prisons, tobacco and e-cigarette production, and adult entertainment.
The actions taken by banks regarding crypto involved restrictions on “issuers, exchanges, or administrators, often linked to financial crime concerns,” according to the OCC.
“It is unfortunate that our nation’s largest banks viewed these detrimental debanking policies as suitable uses of their government-issued charters and market power,” stated Comptroller of the Currency Jonathan Gould.
“Although many of these policies were executed transparently and even made public, certain banks have persistently claimed that they did not engage in debanking,” he added.
The OCC reviewed the operations of JPMorgan Chase, Bank of America, Citibank, Wells Fargo, US Bank, Capital One, PNC Bank, TD Bank, and BMO Bank, which are among the largest national banks under its supervision.
The OCC noted that it is continuing its investigation and may refer findings to the Justice Department.
OCC debanking report leaves “much to be desired”
Nick Anthony, a policy analyst at the libertarian think tank Cato Institute, remarked in a statement to Cointelegraph that the OCC’s report “leaves much to be desired” and did not address “the most recognized causes of debanking.”
“The report criticizes banks for cutting ties with controversial clients but neglects to mention that regulators clearly evaluate banks based on their reputation,” he stated.
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“To complicate matters, the report seems to implicate banks for severing relationships with cryptocurrency companies without acknowledging that the [Federal Deposit Insurance Corporation] explicitly advised banks to avoid these entities,” Anthony added.
Earlier this month, Republicans on the House Finance Committee revealed that the FDIC’s so-called “pause letters” issued to banks during the Biden administration contributed to “the debanking of the digital asset ecosystem.”
Caitlin Long, founder and CEO of the crypto-focused Custodia Bank, stated that the “worst offenders” of crypto-related debanking during the Biden administration were the FDIC and Federal Reserve, “not OCC.”
“In OCC’s defense, this report covers only large banks. Crushing crypto wasn’t a supervisory focus for large banks as it was for smaller and mid-sized institutions,” she added.
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