South Carolina Senator Tim Scott, who chairs the US Senate Banking Committee, intends to propose a legislative measure on March 6 aimed at ceasing regulatory scrutiny of client reputational threats towards financial institutions, thereby leading to the termination of a biased practice known as “debanking,” as reported by The Wall Street Journal.
Debanking refers to a situation where banks may opt not to transact with customers that present “reputational threats.” The Federal Reserve characterizes reputational risk as “the possibility that adverse publicity concerning an institution’s operational practices, whether or not accurate, may lead to a reduction in the customer base, expensive lawsuits, or revenue drops.”
At least 11 Republican representatives are reportedly backing Scott’s measure, while several banking sector organizations anticipate supporting it, The Wall Street Journal noted. Among these entities is the Bank Policy Institute, which identifies itself as a nonpartisan organization representing America’s leading banks. JPMorgan Chase, the largest banking institution in the United States, has also expressed its support for the legislation.
Debanking has reportedly impacted businesses across various sectors over the last two decades, including firearms, federal prison contractors, cannabis, and the cryptocurrency field. This issue has gained considerable attention in the last four years, with cryptocurrency advocates asserting that a campaign was organized to debank legitimate crypto businesses in the US.
Related: Custodia Bank CEO criticizes Washington’s debanking ‘deception’
Senators Kevin Cramer and John Kennedy announced in February 2025 the introduction of a similar legislative proposal intended to secure equitable access to financial services and ensure that financial institutions operate in “a secure and sound manner.” Demonstrating bipartisanship, the progressive American Civil Liberties Union has opposed the practice of debanking.
Debanking of crypto and “Operation Chokepoint 2.0”
In November 2024, Marc Andreessen, co-founder of Andreessen Horowitz, asserted that over 30 technology and cryptocurrency founders had been refused access to banking services in the United States, igniting discussion around the alleged “Operation Chokepoint 2.0” initiated by the Biden administration.
In February 2025, the newly empowered GOP conducted congressional hearings regarding the matter, exposing divisions within party lines yet a surprising consensus that debanking ought to be abolished. Even among external sources that Cointelegraph consulted, there remains uncertainty whether “Operation Chokepoint 2.0” was a genuine concern or merely “rhetorical fodder for the GOP base.”
Related: ‘AI’ wins Collins dictionary word of the year, with ‘debanking’ nominated
While Senator Elizabeth Warren did not specifically reference digital asset firms during a congressional session on debanking on Feb. 5, she indicated that “if banks are implementing policies that systematically debank individuals based on their beliefs or other unjustifiable grounds — that’s incorrect, and it must be halted.”
At ETHDenver on Feb. 28, Custodia Bank’s Caitlin Long remarked that nothing has altered in US crypto banking since the Trump era. “[The] common belief is that there has been a relaxation; yet, none of the federal banking agencies have actually reversed any anti-crypto directives.”
Magazine: Trump’s crypto endeavors even raise conflict of interest, insider trading queries
