The dark side of US financial regulation and the truth about debanking
This week, venture capitalist Marc Andreessen was a guest on Joe Rogan’s podcast and made some controversial remarks about the systemic “debanking” phenomenon, especially in the crypto industry. He opened the show by directly naming the Consumer Financial Protection Bureau (CFPB) as the driving force behind the debanking of crypto startups.
The CFPB is an agency founded by Elizabeth Warren. Some critics counter that not only is there no such thing as debanking, the CFPB is actually working to end it.
There are several different issues involved here that need to be clarified. First of all, what exactly is Marc Andreessen complaining about? Are his concerns well-founded? Second, what exactly is the CFPB’s role in debanking targeted politically unpopular entities—an enabler or a blocker?
For many on the left, they may not understand the crypto industry and the right-wing concerns about debanking. So there’s widespread confusion and even disbelief among the left following Marc’s comments and Elon’s support on the X platform.
I think Marc and Joe's conversation needs to be read in its entirety first, because many people are just reacting based on snippets, and the conversation actually contains many independent claims and in-depth comments.
Please see the appendix for the complete transcript. Let’s discuss this in detail below.
What is Marc Andreessen’s main point?
On the show, Marc makes several interrelated claims. He first criticized the CFPB as an "independent" federal agency with little oversight, capable of "intimidating financial institutions and preventing new competition, especially emerging startups trying to challenge the big banks."
He then mentioned debanking as a specific harm, defining it as "when individuals or companies are kicked out of the banking system entirely." Marc noted that this phenomenon often occurs through banks acting as proxies (similar to indirect censorship by governments through Big Tech), with governments remaining at arm’s length to avoid direct liability.
Marc believes that “this situation has affected almost all crypto entrepreneurs in the past four years. This phenomenon has also affected many financial technology (fintech) entrepreneurs, or even anyone trying to launch new banking services, because the government tried to protect Existing big banks.”
Additionally, Marc mentioned politically unpopular businesses such as the legal marijuana industry during the Obama administration, the escort service industry, as well as gun stores and manufacturing. The Department of Justice (DoJ) dubbed these operations "Operation Choke Point" at the time.
Later, the crypto industry dubbed a similar phenomenon "Choke Point 2.0." Marc said the action was primarily aimed at the government’s political enemies and tech startups they don’t support. "In the past four years, we have seen about 30 founders affected by debanking."
Marc further pointed out that the victims include “almost all crypto founders and startups. They have either been personally debanked and forced out of the industry, or their corporate accounts have been closed, rendering them unable to continue operating, or even banned by the U.S. Securities and Exchange Commission. SEC) or threatened with prosecution.”
Additionally, Marc mentioned that he knows of people who have experienced debanking because they “held unacceptable political views or made inappropriate comments.”
In summary, Marc Andreessen made the following points:
Debanking refers to individuals or businesses being deprived of banking services. This may be because they are in an industry that is politically unpopular, or they hold political views that are different from the mainstream.
The Consumer Financial Protection Bureau (CFPB) bears at least some of the responsibility, but a number of unspecified federal agencies are also involved.
How this works in practice is that regulators delegate the task of financial oppression to banks, allowing governments to avoid direct responsibility.
During the Obama administration, the main victims of debanking were legal but politically unpopular industries, such as marijuana businesses, the adult services industry, and gun stores and manufacturers.
Businesses and entrepreneurs in the crypto industry, as well as financial technology companies (Fintechs), have become prime targets under the Biden administration. Additionally, conservatives sometimes experience debanking because of their political views.
Marc also mentioned that 30 tech startup founders in a16z’s portfolio have experienced debanking.
We will evaluate these arguments in detail at the end of the article.
What do critics think of Marc Andreessen’s views?
Simply put, left-libertarians are unhappy with Marc’s comments. They believe that Marc is using the "debanking" narrative to support the crypto industry and fintech, while ignoring victims who deserve more attention - such as Palestinians who have been banned from Gofundme for sending money to the Gaza corridor. The mainstream left, on the other hand, is more direct, often supporting debanking of its political opponents, and therefore tends to avoid talking about the entire issue.
However, there are also some people on the left who maintain a certain ideological consistency and question the power of corporations and governments in the fields of speech and finance. (This group may be growing, especially as the right regains control of some tech platforms and restores some state power.) These people have been vocal about debanking for some time.
They recognize that while the current main victims of debanking are right-wing dissidents (like Kanye, Alex Jones, Nick Fuentes, etc.), the phenomenon could happen to the left as well if the tables were turned. They have a narrower definition of debanking: "Debanking, or as some financial institutions call it "Derisking", refers to the relationship between banks and banks that are considered politically incorrect, extreme, dangerous or Other non-compliant customers terminate business relationships” (quoted from an article in TFP).
In the article, Rupa Subramanya discusses how banks can completely destroy someone's financial life by deeming them to be too high a reputational risk. In fact, people from across the political spectrum are affected - including Melania Trump, Mike Lindell, Trump himself, Christian charities, January 6th participants, and Muslim crowdfunding organizations and charities.
Still, many on the left remain critical of Marc's views, especially those about the CFPB. Here are some specific examples:
Lee Fang: The CFPB has always been clear against debanking. Why did Andreessen say that? What evidence does he have? What he failed to mention is that the CFPB investigated Andreessen-backed startups for allegedly deceiving consumers, not for political rhetoric. In fact, the roots of debanking lie with the FBI and Department of Homeland Security (DHS), not the CFPB.
Lee Fang: Debanking is indeed a serious problem. For example, we’ve seen truck drivers who opposed COVID-19 policies lose their bank accounts because of their participation in the campaign, and pro-Palestinian organizations were banned from Venmo. But now, some predatory lenders and scammers are conflating consumer protection with “debanking” in an attempt to push for deregulation.
Jarod Facundo: I have absolutely no idea what @pmarca means. A few months ago CFPB Director Chopra warned Wall Street against debanking conservatives for no reason at a Commonwealth Institute event.
Jon Schweppe: I agree with @dorajfacundo. I have absolutely no idea what exactly @pmarca is referring to. The CFPB has been leading the charge against discriminatory debanking. What the hell is going on?
Ryan Grim: The CFPB recently issued a very good new rule specifically targeting banks debanking users because of their political views. Yes, this is a left-populist CFPB chief standing up for conservative rights. And now, venture capitalists and Musk who don’t like the CFPB are spreading lies in an attempt to stir up public sentiment in order to weaken the CFPB’s power.
Overall, these critics are not kind to the cryptocurrency and fintech industries. They argue that companies in these sectors are not “real” victims of debanking, especially compared to crowdfunding platforms that send money to Gaza.
In their view, the encryption industry “brought it to its own devices.” They believe that cryptocurrency founders spam tokens and are suspected of fraud and fraud, so it is natural for banks to take action against them. “If crypto founders are debanked, that’s just a matter of bank regulation and has nothing to do with us.”
Furthermore, these critics argue, Marc's mistake was in placing the blame on the CFPB. They said that the CFPB is precisely an agency dedicated to fighting debanking, and Marc is dissatisfied with the CFPB simply because the financial technology platforms he invested in are strictly regulated by the CFPB to ensure that these platforms do not abuse consumer rights.
Since Marc’s remarks on Rogan’s show, many founders in the tech and crypto industries have come forward to describe their experiences of being unilaterally stripped of services by banks.
Some in the crypto industry believe that the unconstitutional assault on the crypto industry by regulators is coming to an end and they are seeing a light. Calls for investigation into Operation Choke Point 2.0 have also reached a fever pitch.
So, who is right? Is it Andreessen or his critics? Is the CFPB really to blame? Is debanking really as bad as Marc says? Let’s start with the CFPB’s role.
What is the CFPB?
The Consumer Financial Protection Bureau (CFPB) is an “independent” agency established in 2011 under the Dodd Frank Act in the aftermath of the financial crisis.
Its responsibilities are broad and include oversight of banks, credit card companies, fintech companies, payday lenders, debt collection agencies and student loan companies.
As an independent agency, the CFPB is not dependent on Congress for funding (and is therefore immune from congressional funding review). Its director cannot be easily removed by the president, and the agency can directly write rules and bring enforcement and legal cases in its own name.
Suffice to say, the CFPB wields considerable power. The creation of the CFPB was largely driven by Senator Elizabeth Warren.
The CFPB has been targeted by conservatives and libertarians alike because it is a new federal agency and has little oversight. It was set up by Elizabeth Warren, a common target of criticism on the right.
The CFPB’s goal is to effectively “regulate” fintech companies and banks.
However, most of these companies are already heavily regulated. For example, banks are subject to state or federal (OCC) supervision, while also reporting to the FDIC, Federal Reserve (Fed), and SEC (if they are public companies). Credit unions, mortgage lenders, etc. also have their own regulatory agencies.
Before the establishment of the CFPB, there were no obvious gaps in U.S. financial regulation. In fact, the United States has more financial regulators than any country in the world. So it’s not without reason that the right is skeptical of Elizabeth Warren’s motives.
Regarding the CFPB’s terms of reference:
The CFPB's mandate contains provisions that expressly oppose discrimination in banking services. These include the "Unfair, Deceptive, or Abusive Practices (UDAAP)" sections of the Equal Credit Opportunity Act (ECOA) and the Dodd-Frank Act. Under ECOA, there is no discrimination in credit transactions based on the following protected categories: race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.
However, the "Choke Point" issue raised by Marc Andreessen is not actually within the scope of application of these regulations. “Cryptopreneurs” or “conservatives” do not fall into protected categories as defined by law.
Therefore, this part of the CFPB’s authority, even in theory, would not address politically motivated crackdowns on specific industries. Furthermore, ECOA primarily addresses credit services rather than banking services as a whole.
The UDAAP portion of Dodd-Frank is another provision that could involve debanking. The provision gives the CFPB broad authority to combat conduct deemed unfair, deceptive or abusive.
For example, the CFPB’s massive settlement with Wells Fargo was based on UDAAP. In theory, if the CFPB were to address debanking, it might do so through UDAAP. However, apart from making some statements, they have so far taken no real action.
CFPB’s official statement
CFPB Director Rohit Chopra made clear his opposition to payment platforms banning users for political motives in a Federalist Society speech in June.
In his speech, he expressed concern about big tech payment platforms such as PayPal and Venmo irresponsibly banning users, especially when these platforms do not give users any opportunity to appeal.
He specifically mentioned that the platforms may exclude users because they have expressed politically unpopular views elsewhere. This phenomenon does exist, so it's encouraging that Chopra is able to openly discuss these issues.
However, there are two problems here.
First, Chopra's focus is primarily on the irresponsible behavior of private businesses, especially when those businesses have monopoly-like characteristics. He did not address the risk of government power, the possibility of governments using regulatory tools to force banks to "redline" entire industries. And this is exactly the point of Marc Andreessen’s criticism.
Second, while Chopra’s words deserve recognition, the CFPB’s actual actions in this regard remain limited. Based on current trends, they may regulate large non-bank payment networks. The issue with Choke Point 2.0, however, is more about the power governments exert over banks through financial regulators.
Such matters are not within the CFPB's purview but are left to the Federal Reserve (Fed), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the executive departments responsible for overseeing these agencies (or, in the case of investigations, Congress) is responsible.
The CFPB does not have the authority to oversee other financial regulators, so their ability to address "killer" behavior is limited. (It’s worth mentioning, though, that Chopra sits on the FDIC’s board of directors, so he’s at least partly responsible for, or at least aware of, some of the FDIC’s misconduct.)
Notably, the CFPB made clear in a court filing in August that the debanking of Christians was discriminatory, noting that the agency has legal authority to address the issue.
This stance was viewed by Lee Fang as a positive (and surprising) development, as the CFPB has not shown itself to be particularly sympathetic to conservative groups. As mentioned earlier, religious groups belong to a "Protected Class" defined in the law, so there is not much controversy about the CFPB's legal intervention in the financial exclusion of religious groups.
However, we have yet to see the CFPB take similar action against non-protected classes (such as ordinary conservatives, or industries like cryptocurrency), which will be explored in detail in the next section. Nonetheless, this move is certainly a step in the right direction.
CFPB Actions
Recently, the CFPB finalized a new rule that would bring digital wallets and payment apps under its regulatory purview and treat them as bank-like institutions. Under the rule, large digital payment platforms including Cash App, PayPal, Apple Pay and Google Wallet will be required to provide transparent explanations for account closures.
In the rule announcement, the CFPB clearly mentioned the phenomenon of “debanking.” Note, however, that this rule applies to "big tech companies" or peer-to-peer payment apps, not banks.
There have been no enforcement actions against this rule, so we cannot yet judge how effective it will be in practice.
So, can this rule curb behavior like Operation Choke Point 2.0? The answer is almost no.
First, the rule only targets the conduct of technology companies, not banks. Secondly, the "Operation Stifling" behavior was not decided by banks independently, but was a systemic pressure exerted by federal regulators on the entire industry through banks.
If the CFPB came to notice, for example, that cryptocurrency startups were being systematically cut off from banking services, they would have to go head-to-head with the FDIC, the Federal Reserve, the OCC, and even the White House to end the practice.
However, given Elizabeth Warren’s strong opposition to cryptocurrencies, one can’t help but wonder if the CFPB would take such action. More importantly, the essential problem with "Operation Stifling" is that bank regulators transcend legal boundaries and try to de-bank the entire industry, rather than the autonomous behavior of individual banks (banks only passively implement the orders of regulators).
In theory, under UDAAP, if an industry (such as cryptocurrency) experiences systematic account closures, the CFPB has the authority to investigate.
However, the recently introduced payment app rule—which some critics of Marc Andreessen cite as evidence of the CFPB’s anti-debanking stance—doesn’t apply to banks.
Furthermore, the CFPB has yet to take substantive steps to address debanking in its actual enforcement actions.
About the CFPB’s Major Enforcement Actions
In the CFPB's enforcement records, I did not find any settlements directly related to debanking. Here are their top 30 settlements, sorted by dollar amount:
The closest relevant case is the 2023 Citigroup case. At the time, they were found to have discriminated against Armenian-Americans in credit card applications.
According to Citigroup, this practice is due to the high rates of fraud (spurred by fraud rings) in the Armenian community in California. Ultimately, Citigroup paid a $25.9 million fine.
Another case is that of Townestone Financial in 2020. The CFPB paid a $105,000 fine after finding the company used marketing to discourage African Americans from applying for mortgages.
It should be noted that nationality and race are “Protected Classes” defined in U.S. law, so these cases do not involve purely political “redlining.” This is fundamentally different from critics’ accusations of de-banking the cryptocurrency industry.
Additionally, I reviewed the 50 most recent CFPB settlements since March 2016 and found none involving the deprivation of banking services for arbitrary reasons.
Of the 50 cases, 15 involved UDAAP violations (such as the famous Wells Fargo case), 8 involved fair lending violations, 5 involved student loan servicing, 5 involved credit reporting inaccuracies, and 5 involved mortgage loans services, four involving auto loan discrimination and three involving illegal overdraft practices. As for the issue of de-banking: not covered at all.
On Marc’s criticism of crypto/fintech companies and conservatives being debanked
On this issue, the situation is crystal clear. I have documented in detail the phenomenon known as Operation Choke Point 2.0.
The approach originated under the Obama administration and has resurfaced under the Biden administration. In 2013, Obama's Department of Justice (DoJ) launched Operation Choke Point, an official program designed to target legal but politically unpopular industries such as the banking industry. Payday loans, medical marijuana, the adult industry, and gun manufacturers.
Iain Murray discusses this in detail in his article (Operation Kill: What it is and why it matters).
During the Obama administration, the FDIC, under the leadership of Marty Gruenberg, used hints and threats to persuade banks to "derisk" companies in more than a dozen industries. The move sparked an outcry from conservatives and was exposed by members of the House of Representatives, led by Representative Luetkemeyer.
Critics argue that this secretive regulation through "persuasion" is unconstitutional because it does not go through a formal rulemaking or legislative process.
In 2014, a Justice Department memo about the practice was leaked, followed by a critical report from the House Oversight and Government Reform Committee.
The FDIC subsequently issued new guidance requiring banks to assess risks on a case-by-case basis rather than "redlining" the entire industry. In August 2017, the Trump administration’s Justice Department officially ended the practice.
In 2020, Trump’s Comptroller of the Currency Brian Brooks issued the “Fair Access” rule aimed at ending debanking based on reputational risk.
However, in May 2021, Biden's acting Comptroller of the Currency, Michael Hsu, revoked the rule. In early 2023, in the wake of the FTX crash, people in the crypto industry, myself included, noticed that similar “Operation Stifle” tactics were being implemented against cryptocurrency founders and companies.
In March 2023, I published an article (Operation Strangling 2.0 is underway, cryptocurrencies are targeted) and a follow-up article in May revealed more new developments.
Specifically, I discovered that the FDIC and other financial regulators secretly imposed a “15% deposit cap” policy on banks targeting cryptocurrency-related companies.
This means that banks cannot accept more than 15% of their total deposits from crypto-related businesses. In addition, I believe that the two banks in the crypto industry, Silvergate and Signature, did not fail due to market reasons, but were forced to liquidate or close due to the government's hostile attitude towards the crypto industry.
Since then, cryptocurrency companies have continued to face significant difficulties in accessing banking services—despite the absence of any public regulations or legislation explicitly requiring banks to restrict services to crypto businesses.
Law firm Cooper and Kirk said the approach of "Choke Point 2.0" violated the Constitution.
Recently, I re-investigated this phenomenon and discovered new evidence that Silvergate Bank did not fail naturally but was "deliberately executed".
(See tweet for details)
Currently, this “15% deposit cap” policy for cryptocurrency banks still exists, severely restricting the development of the industry.
Almost all US-based crypto entrepreneurs have been affected by this - I can confirm that about 80 crypto companies in our portfolio have faced similar issues. Even my firm, Castle Island, a venture capital fund that only invests in fiat-related businesses, experienced bank accounts being abruptly closed.
After Marc was a guest on Rogan’s show, many senior crypto industry executives also shared their experiences.
David Marcus revealed that Facebook’s Libra project was terminated due to the intervention of Janet Yellen. Kraken CEO Jesse Powell, Joey Krug, Gemini CEO Cameron Winklevoss, Visa’s Terry Angelos and Coinfund’s Jake Brukhman, among others, have also said their companies have encountered severe obstacles in banking services.
Caitlin Long has long been publicly opposed to "Operation Kill 2.0" and even founded her own bank, Custodia. However, Custodia Bank was deprived of its Master Account qualification by the Federal Reserve and was unable to operate normally.
While critics may lack sympathy for the crypto industry, it must be acknowledged that crypto is a perfectly legitimate industry that has been suppressed by secret directives and insinuations from banking regulators. This kind of suppression is not passed through legislation or public rule-making, but is operated behind the scenes by administrative agencies, bypassing democratic procedures.
It’s not just the crypto industry, fintech companies are also facing similar dilemmas. Since the start of 2023, a quarter of the FDIC’s enforcement actions have been against banks that partner with fintech companies, while non-fintech partner banks account for just 1.8%, according to research from Klaros Group.
As an investor in the fintech space, I can personally attest to the extreme difficulty fintech companies have finding banking partners, a difficulty that almost rivals the challenges crypto companies have access to banking services.
The Wall Street Journal criticized the FDIC's action, noting that the agency "actually conducted rulemaking while bypassing the notice and public comment requirements of the (Administrative Procedure Act)."
This behavior not only caused substantial harm to the industry, but also raised widespread questions about its legality.
Andreessen’s reference to conservatives being debanked does have plenty of examples to back it up. For example, Melania Trump mentioned in her recent memoir that she had her account canceled by a bank.
The right-wing speech platform Gab.ai has encountered similar problems. In 2021, General Michael Flynn had his account closed by JPMorgan due to perceived "reputational risks."
In 2020, Bank of America closed the account of Christian nonprofit Timothy Two Project International, and in 2023 froze the account of Christian pastor Lance Wallnau.
In the UK, Nigel Farage was debanked by Coutts/NatWest, an incident that even sparked a minor public outcry. These are just some of the many cases.
Under current law, U.S. banks have the right to close accounts for any reason without providing an explanation to the customer. So, substantively, Andreessen is right: debanking is real and has far-reaching consequences.
Controversy over the term “debankization”
Critics believe Andreessen is trying to use the concept of "debanking" to promote his own economic agenda.
Some have noted that his motivation for focusing on the issue is to reduce regulatory pressure on the cryptocurrency and fintech industries. Lee Fang mentioned:
“Debanking is indeed an important issue. We’re seeing truckers who oppose COVID-19 vaccine mandates lose their bank accounts for their activities, and pro-Palestinian organizations losing access to payment platforms like Venmo. But now, some predatory lenders and Scammers confuse consumer protection with ‘de-banking’ to call for deregulation.”
Additionally, the Axios author suggested that Andreessen's concerns with the Consumer Financial Protection Bureau (CFPB) may be related to his company's investments in controversial new banks, such as Synapse, which collapsed earlier this year.
This criticism contends that Andreessen’s sole focus on “debanking” is to advance the interests of the cryptocurrency and fintech industries while circumventing the CFPB’s oversight of consumer protections.
While the critics' argument sounds logical, the truth is more complicated. Historically, the Obama administration did develop strategies to use bank regulations to clamp down on certain industries, such as gun manufacturing and payday lending, which were deemed unconstitutional.
The Biden administration has further optimized these strategies and used them effectively to suppress the cryptocurrency industry.
For example, by putting pressure on partner banks, the government indirectly limits banking services for cryptocurrency companies. These practices are not enacted through legislation or public rules, but are operated behind the scenes through administrative means, bypassing democratic procedures.
Currently, this strategy is also beginning to target the financial technology industry.
According to research by Klaros Group, a quarter of FDIC enforcement actions since the start of 2023 have been against banks that partner with fintech companies, compared with just 1.8% against banks that do not partner with fintech companies. As an investor in the fintech space, I can see firsthand that this approach has made it extremely difficult for fintech companies to find banking partners, almost as difficult as it is for cryptocurrency companies to obtain banking services.
These phenomena indicate that the power of administrative agencies has exceeded its boundaries and has seriously affected multiple legitimate industries.
Both the cryptocurrency and fintech industries need a more transparent and democratic approach to regulation, rather than relying on secret directives and vague policy enforcement. In the future, with the adjustment of regulatory policies, these problems may be gradually exposed and corrected.
Whether commentators like Fang believe that the Biden administration’s debanking of cryptocurrency companies undermines his moral criticism of more sympathetic groups being debanked is beside the point.
The fact is, this is happening, it’s debanking, and it’s illegal. Likewise, it doesn’t matter whether Marc Andreessen’s criticism of the CFPB is financially motivated. (To date, the CFPB has not taken enforcement action against any companies in which Andreessen’s venture capital firm, a16z, has invested, according to my investigation.)
Importantly, bank regulators (not just the CFPB, but multiple agencies) do instrumentalize the financial system for political purposes.
This behavior has gone far beyond the scope of authorized administrative power and caused harassment to legitimate industries. The fact is that this kind of ultra vires behavior does exist.
An assessment of Andreessen’s views on Rogan’s show
Based on a comprehensive analysis, we can evaluate the arguments made by Andreessen, comment by comment:
Debanking is when an individual or business is deprived of banking services because of their political unpopularity in their industry or because of their dissident political views.
This definition is spot on. Importantly, the seriousness of debanking should not change based on whether the victims meet someone's criteria for compassion.
The CFPB does often take a heavy-handed approach to fintech companies and banks, and its need to exist is questionable.
However, based on available information, the CFPB is not the primary responsible party for Operation Kill 2.0. The more directly responsible parties are the FDIC, OCC and Federal Reserve, which are acting in coordination with the Biden administration. While the CFPB has recently taken a stance on debanking, it has taken no concrete action, so it is neither relieving the problem nor the primary responsible party.
The core of debanking is that regulators avoid direct government responsibility by having banks carry out financial repression.
The pattern is similar to the way big tech companies are used to censor dissidents. By allowing banks or financial technology platforms to deny service, "enemies of the regime" can be effectively suppressed while avoiding excessive attention from the outside world.
The Obama administration's Operation Chokepoint focused on legal but unpopular industries, including marijuana companies, the adult industry, and gun stores and manufacturers.
This description is accurate. In fact, the movement first started in the payday loan industry, but Andreessen didn't mention that.
The Biden administration’s debanking drive has primarily targeted cryptocurrency companies and fintech firms, while also occasionally involving conservative figures.
Both of these points are true. We have more evidence that the crackdown on the crypto industry is a coordinated effort and less evidence on the fintech industry, but the FDIC has exerted indirect pressure through enforcement actions against partner banks.
As for conservatives being debanked, we have plenty of anecdotal evidence, but no internal bank policies explicitly targeting conservatives. Such actions are usually based on "reputational risk" and are decided on a case-by-case basis.
At the end of the day, banks are completely black boxes and they don't have to give a reason for reducing personal or corporate risk.
Founders in a16z portfolio de-banked
Based on available information, it is entirely possible, even very likely, that the 30 tech founders in a16z’s portfolio would be debanked.
As an active cryptocurrency investment institution, many of a16z’s investment projects involve cryptocurrencies, and almost all domestic cryptocurrency startups have faced banking service issues at some stage.
Where did Marc go wrong?
Marc exaggerates a bit when describing the role of the CFPB. The recent crackdown on the cryptocurrency and fintech industries has actually been led more by regulators like the FDIC, OCC, and Federal Reserve than the CFPB. However, Marc did mention on the show that some unspecified "institutions" were involved in debanking, although he did not specifically mention the FDIC, OCC, or Federal Reserve. In addition, the influence of CFPB founder Elizabeth Warren on this matter cannot be ignored. She was one of the key drivers of Operation Kill 2.0, especially her appointee Bharat Ramamurti, who spearheaded the effort in the Biden administration's National Economic Council. Therefore, it is understandable that Marc would magnify the responsibility of the CFPB.
Marc's discussion of PEP is a little one-sided. Being classified as a politically exposed person does not directly result in the closure of a bank account, but it does increase the due diligence requirements banks place on these customers. Marc may have been inspired by the de-banking of Nigel Farage by Coutts. In this case, Nigel was deemed to be PEP, which was indeed a factor, but not the only reason.
Despite some deviations in detail, Marc's main point is correct, while his critics' counterarguments do not hold up.
The CFPB has not yet emerged as an effective force against debanking, which is certainly happening and is particularly impacting the cryptocurrency and fintech industries. As Republicans take control of Congress and related investigations begin, more evidence is expected to reveal the true scale and mechanics of debanking.
This article is reproduced in cooperation with: Shenchao
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