The Office of the Comptroller of the Currency stated that the cryptocurrency sector was amongst a multitude of industries to which banking institutions had refused services, and its determinations could be relayed to the Department of Justice.
Financial services were curtailed by the nine most prominent U.S. banking entities for politically sensitive sectors, including digital assets, spanning the period between 2020 and 2023, based upon the initial discoveries of the Office of the Comptroller of the Currency.
The banking oversight body asserted on Wednesday that its initial findings evince that major financial institutions “have instituted improper differentiations amongst clientele in the delivery of financial provisions based on the legality of their commercial pursuits” throughout the three-year duration.
Policies that restricted accessibility to banking were either instituted by the financial institutions, or else heightened scrutiny and formal authorizations were necessitated before financial provisions were extended to specific clientele, the confirmed, omitting concrete particulars.
The commenced its scrutiny subsequent to the signing of an executive mandate by President Donald Trump in August, which directed an assessment of whether banking establishments had either removed services from or had shown bias against individuals predicated upon their political or spiritual convictions.
Crypto Issuers and Exchanges Squeezed by New Restrictions
The document produced by the OCC ascertained that, besides digital assets, the sectors that encountered banking limitations encompassed the exploration of petroleum and natural gas, the extraction of coal, armaments, privately administered correctional facilities, producers of tobacco and vaping devices, and businesses related to mature leisure activities.
The measures taken by banking institutions concerning digital assets encompassed limitations upon “issuers, trading platforms, or principal managers, which were frequently ascribed to concerns regarding financial malfeasance,” was confirmed by the OCC.
“It is unfortunate that the nation’s largest banks thought these harmful debanking policies were an appropriate use of their government-granted charter and market power,”
said Comptroller of the Currency Jonathan Gould.
“While many of these policies were undertaken in plain sight and even announced publicly, certain banks have continued to insist that they did not engage in debanking,”
he added.
The nine most substantial national banking institutions under its jurisdiction—JPMorgan Chase, Bank of America, Citibank, Wells Fargo, U.S. Bank, Capital One, PNC Bank, T.D. Bank, and B.M.O. Bank—were subjected to scrutiny by the Office of the Comptroller of the Currency (OCC).
The OCC communicated that its detailed inquiry is still proceeding, and its conclusions could potentially be forwarded to the Department of Justice.
OCC’s Debanking Report Falls Short, Critics Say
A communication was transmitted via electronic mail by Nick Anthony, a policy evaluator affiliated with the libertarian policy organization, the Cato Institute, in which he asserted that the OCC’s document “is significantly lacking” and failed to reference “the most widely recognized rationales for banking service removal.”
“The report criticizes banks for severing ties with controversial clients, but it fails to mention that regulators explicitly assess banks on their reputation,”
he said.
“Making matters worse, the report appears to blame banks for cutting ties with cryptocurrency companies, yet makes no mention of the fact that the [Federal Deposit Insurance Corporation] explicitly told banks to stay away from these companies,”
Anthony added.
It was reported earlier this month by Republican members of the House Finance Committee that the Federal Deposit Insurance Corporation’s (FDIC) purported “pause letters,” which were dispatched to banking institutions during the tenure of the Biden administration, contributed to stimulating “the removal of services from the digital asset ecosystem.”
Caitlin Long, who established and serves as the Chief Executive Officer (CEO) of the crypto-centric Custodia Bank, asserted that the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve were the primary offenders responsible for the removal of services from the digital asset sector during the current administration, clarifying that the Office of the Comptroller of the Currency (OCC) was not the institution accountable.
“In OCC’s defense, this report covers large banks only. Crushing crypto wasn’t a supervisory priority for large banks like it was for small [and] mid-sized banks,”
she added.
