Written by: Edward Woodford
Compiled by: Block unicorn
In a recent conversation on The Joe Rogan Experience, Marc Andreessen (@pmarca) highlighted a concerning trend affecting the financial landscape: debanking. Under pressure from regulators and advocacy groups, financial institutions are increasingly refusing to provide banking services to individuals, organizations, and entire industries. I believe that a key point about debanking that has been overlooked in the narrative is as follows:
0. Overview
A. Reaching Consensus on the Definition of Debanking
Debanking is not a binary concept. Rather, it is a pervasive attempt to restrict financial services to specific industries rather than treating every participant in that field based on risk assessment. Zero Hash and other primary players in the stablecoin and cryptocurrency field have strong banking partners, but this does not negate the existence of 'debanking.' Specifically, we hold client and operational funds in several of the top 20 banks.
The rebuttal I hear is that banks have the right to decide who they serve based on risk assessments. However, the difference here is:
Emphasizes that specific industries contradict the guidance issued by the OCC (Office of the Comptroller of the Currency), which clearly states that broad, categorical discrimination against businesses engaged in lawful activities is not permitted.
The FDIC (Federal Deposit Insurance Corporation) attempted to unilaterally pre-determine banks' risk profiles rather than allowing banks to determine this themselves. By setting risk profiles for legitimate businesses, regulators contradicted the OCC's longstanding guidance that banks should make deposit account decisions based on risk assessments of all customer accounts. This is an extreme form of 'implicit regulation' (a term I coined in a recent blog), where it is clearly indicated that certain activities will be closely scrutinized, creating such a burden that it effectively prevents certain activities that are not prohibited by law.
B. Debanking is a fact.
Of course, the effects of debanking are evident; we have experienced instances of bank accounts being closed within a day, including with partners we have been working with since 2017.
The extent of the impact is incredible. We were nominated for an award, and the dinner for nominees was sponsored by a bank. At the bank's request, I was disinvited because 'paying for my dinner might raise misunderstandings.'
We operate a business across multiple jurisdictions. The same banks provide banking services for all our non-U.S. subsidiaries, but do not provide services for our U.S. entity. Same owners, same risk profile.
In the past 18 months, of the over 120 banks we proactively contacted, about 80% refused to engage in any meaningful discussions (to examine the risk profile in more detail) purely based on the industry we are in.
C. Why Should Everyone Care?
Is this a matter of rights? Banking is essential to modern life (and any business), and arbitrary refusal to provide banking services raises constitutional and ethical concerns.
Higher costs. The reduction in competition distorts the market.
Creates concentrated risk. The fewer banks that can serve a particular industry, the greater the concentration risk, which adds more risk to the customer base.
Andreessen used the term 'Operation Choke Point 2.0' (originally coined by @nic__carter), which bears similarities to the controversial initiative from the Obama administration. At that time, regulators pressured banks to sever ties with legitimate but politically disfavored industries. Today, this trend has expanded, with industries like cryptocurrency being denied banking services not due to illegal activity, but due to reputational issues or political pressure.
Banking has long been viewed as a neutral utility but has now become a battleground for cultural, political, and economic conflicts. The question we must ask is: when financial access is weaponized, who gets to decide who can participate in the modern economy?
1. The Rise of Debanking in Public View
Since Andreessen's appearance on November 26, discussions on this topic have accelerated:
On November 29 - former PayPal president and Lightspark co-founder David Marcus (@davidmarcus) shared a post discussing how political pressure stifled Meta's stablecoin project Libra.
Elon Musk (@elonmusk) reacted with a 'Wow' to Marcus's post.
Coinbase (@coinbase) CEO Brian Armstrong (@brian_armstrong) shared Marcus's post, adding, 'This makes sense—government is (again) pressuring banks.'
On December 4 - U.S. Congressman French Hill (@RepFrenchHill) spoke in Congress about the issue of debanking in the cryptocurrency industry and pledged to 'stop, reverse, and investigate Operation Choke Point 2.0.'
On December 6 - former Silvergate CTO Chris Lane (@D_CentralBanker) shared his experiences regarding regulatory pressure on cryptocurrency banks, drawing attention from David Sacks (@DavidSacks), who shared Lane's post and commented, 'There are too many stories of people being harmed by Operation Choke Point 2.0. This needs to be investigated.'
On December 6 - court documents filed in a lawsuit against the FDIC revealed letters in which the agency requested banks to pause cryptocurrency-related activities. 'These letters indicate that Operation Choke Point 2.0 is not merely some sort of cryptocurrency conspiracy,' said Coinbase Chief Legal Officer Paul Grewal (@iampaulgrewal).
On December 10 - The New York Times published an article by Erin Griffith (@eringriffith) and David Yaffe-Bellany (@yaffebellany), analyzing how debanking has quickly become a 'political weapon.'
On December 19 - SEC Commissioner Hester Peirce (@HesterPeirce) voted against approving the $400 million budget for the Public Company Accounting Oversight Board (PCAOB), expressing concerns that the board was 'trying to use regulatory measures to stop regulated entities from providing services to the cryptocurrency industry or otherwise engaging with cryptocurrency.' Although Peirce expressed opposition, the budget was approved by three other commissioners, including SEC Chairman Gary Gensler.
2. Is banking a right?
Banking is a service provided by private enterprises. However, in an economy where almost all transactions rely on financial infrastructure, the operation of this service is similar to that of a utility. Without it, participating in modern life—whether paying bills, receiving wages, or accessing credit—is nearly impossible.
In the conversation with Rogan, Andreessen argued that debanking could infringe upon constitutional rights. If banking services are essential for economic participation, then denying them without clear justification—or under opaque political pressure—could constitute a deprivation of fundamental rights. While the Constitution does not explicitly enumerate a right to banking services, legal precedents have established a close connection between financial activities and fundamental rights such as freedom of speech and due process.
The foundation of these debates rests on cases such as Buckley v. Valeo (1976) and Citizens United v. Federal Election Commission (2010). Both rulings emphasized that money, as a medium of expression, is protected by the First Amendment. While these cases centered around campaign finance, they established a principle: the ability to use financial resources is crucial for participation in public discourse. If financial services can be arbitrarily denied, it effectively suppresses legitimate voices.
The Fifth and Fourteenth Amendments' guarantees of due process provide another perspective: in Goldberg v. Kelly (1970), the Supreme Court ruled that government benefits essential to an individual's livelihood cannot be terminated without due process. While banking is provided by private institutions, its critical role in modern life aligns it with utilities, suggesting that arbitrary refusals to provide banking services may violate due process protections.
The issues of financial neutrality, particularly concerning debanking, have already come under scrutiny this year. In the case of NRA v. Vullo (2024), the Supreme Court unanimously ruled that the head of the New York State Department of Financial Services could not use her power to force banks and insurance companies to sever ties with the NRA. Justice Sonia Sotomayor stated that while regulators can express opinions, they cannot compel financial institutions to discriminate against legal entities based on political positions.
These rulings confirm that financial exclusion—whether due to direct government coercion or indirect reputational pressure—raises significant constitutional issues. As Andreessen pointed out on The Joe Rogan Experience, 'Five years from now, the Supreme Court might have a case that retroactively declares all of this illegal.'
3. Legal Businesses Are Legal
Essentially, debanking raises a simple question: if an entity operates within the bounds of the law, should it have the right to access banking services? The answer seems obvious—but the trend of debanking legal businesses suggests otherwise.
This should be a non-political statement. The OCC has issued guidance stating that it does not allow broad, targeted discriminatory classifications against businesses engaged in lawful commercial activities.
Excluding compliant businesses from basic financial services is a dangerous trend—it has the potential to embed subjective bias into the pillars of modern economic infrastructure. If the financial system chooses which legal entities to support, it ceases to be a neutral platform and instead becomes a tool for enforcing political or cultural agendas.
Fair access is not about forcing banks to take on undue risks. It is about ensuring that the financial system remains inclusive and neutral, allowing all legitimate businesses to operate. Without this neutrality, we risk turning banking into a gatekeeping mechanism that stifles innovation and undermines social trust, thereby eroding trust in one of society's most critical systems.
4. Zero Hash: A Case Study in Overregulation.
At Zero Hash, we have experienced these challenges firsthand. Despite adhering to the highest standards of compliance regulations—standards that have earned us the trust of over 75 institutions, including Interactive Brokers, Stripe, and Franklin Templeton—we still face significant barriers in securing and maintaining banking relationships.
Our extensive licensing reflects our commitment to transparency and compliance. We are authorized to operate in over 200 jurisdictions worldwide, including all states and territories in the United States. In the U.S., our licenses include:
New York Bitlicenses: This is one of the strictest regulatory frameworks for virtual currency businesses.
Money Transmitter Licenses (MTLs): Allow us to operate in all 52 jurisdictions in the U.S. (50 states plus Washington D.C. and Puerto Rico) and ensure compliance with state-level requirements for money service businesses.
FinCen registered as a Money Service Business (MSB): Compliance with federal laws requiring anti-money laundering (AML) and counter-terrorism financing (CTF) obligations.
Even though we have licenses that rival or exceed those of traditional financial institutions, they are still unwilling to work with us. Over the past 18 months, we proactively reached out to over 120 banks, of which about 80% refused to engage in any meaningful discussions purely because of the industry. Among the banks that did engage in discussions, only half conducted due diligence.
This issue is less prevalent in Europe. International banks willing to work with us actively cooperate abroad but explicitly refuse to work with us in the U.S. Ironically, it is the same bank, dealing with the same company, facing the same risk situation—but regulatory and political factors in the U.S. create barriers that do not exist elsewhere. This disparity highlights the chilling effect of ambiguous regulatory frameworks and overregulation, which actively hinders innovation in the U.S. and forces companies to look elsewhere to build the future.
5. The Stakes of Financial Neutrality
Debanking is not just a logistical barrier—it directly challenges the principles of fairness, freedom, and trust that our financial system relies on. This is not just about cryptocurrency; it concerns ensuring that everyone has access to modern financial infrastructure.