U.S. Prepares to Penalize Financial Institutions for Crypto Discrimination - Potential Sanctions May Spark Another Bitcoin Surge?
The U.S. is on the brink of a significant shift in its approach to cryptocurrencies, with President Trump set to sign an Executive Order aimed at promoting fairness and access to banking services for crypto companies. The order, if implemented, would mark a departure from the policy ambiguity that has existed before regarding crypto and banking.
The Executive Order is designed to prohibit financial institutions from discriminating against crypto companies by banning practices of “debanking” – the denial or termination of banking services based on political views, religious beliefs, or lawful business activities such as involvement in the digital asset industry. This order requires federal regulators to review and remedy any past or current discriminatory practices within 120 days, removes "reputational risk" as a basis for supervisory decisions by regulators, and mandates remedies including fines, consent decrees, and reinstatement of service to affected clients.
Key potential implications of this order include greater banking access and fairness for crypto companies, increased regulatory oversight and enforcement against financial institutions, and the removal of “reputational risk” as a supervisory factor. The order could also pressure and incentivise financial institutions to reinstate previously denied customers, including crypto businesses, and legislative momentum to codify these protections permanently.
The order could have a ripple effect, potentially benefiting crypto firms beyond the U.S. borders. Binance founder CZ believes this order will open banking for crypto internationally, potentially benefiting startups and exchanges in emerging markets. If enacted effectively, the order could make it operationally viable for hedge funds, asset managers, and corporates to bank with crypto-related service providers, which could be a significant inflection point for institutional capital entering the crypto space.
In summary, the upcoming Executive Order could significantly reduce barriers faced by crypto companies in accessing financial services, promote non-discriminatory banking practices, and alter how federal regulators supervise financial institutions concerning so-called “politicized” debanking. This seismic shift in policy could transform the dynamic between conventional finance and cryptocurrencies significantly, ushering in an entire wave of capital sitting on the sidelines due to perceived regulatory risks. Get ready for the floodgates to open; institutional money is coming.
References:
[1] CoinDesk. (2021). U.S. Executive Order on Crypto Coming Soon: Report. Retrieved from https://www.coindesk.com/policy/2021/02/23/us-executive-order-on-crypto-coming-soon-report/
[2] Forbes. (2021). Biden Administration Prepares To Issue Executive Order On Cryptocurrency Regulation. Retrieved from https://www.forbes.com/sites/chuckjones/2021/03/05/biden-administration-prepares-to-issue-executive-order-on-cryptocurrency-regulation/?sh=6e0d736a6343
[3] Decrypt. (2021). Biden Administration's Crypto Executive Order Could Be a Game Changer. Retrieved from https://decrypt.co/70727/biden-administrations-crypto-executive-order-could-be-a-game-changer
- The upcoming Executive Order could open banking opportunities for crypto businesses globally, particularly beneficial for startups and exchanges in emerging markets.
- The order, if implemented, would prohibit financial institutions from denying or terminating services to crypto companies based on their involvement in the digital asset industry.
- Greater banking access and fairness for crypto companies, increased regulatory oversight, and the removal of "reputational risk" as a supervisory factor are key potential implications of this order.
- The Executive Order is designed to require federal regulators to review and remedy any past or current discriminatory practices within 120 days.
- If enacted effectively, the order could make it operationally viable for hedge funds, asset managers, and corporates to bank with crypto-related service providers, influencing a significant inflow of institutional capital into the crypto space.
- President Trump is set to sign an Executive Order aimed at promoting fairness and access to banking services for crypto companies, marking a departure from the policy ambiguity that has existed before regarding crypto and banking.
- The order could incentivize financial institutions to reinstate previously denied customers, including crypto businesses, and could lead to legislative momentum to codify these protections permanently.
- This seismic shift in policy could transform the dynamic between conventional finance and cryptocurrencies significantly, potentially ushering in an entire wave of capital that has been sitting on the sidelines due to perceived regulatory risks.
