A U.S. House committee tasked with holding the federal government accountable says it is investigating alleged debanking in the crypto industry.
In a letter sent by the House Committee on Oversight and Government Reform to Uniswap Labs CEO Hayden Adams, Coinbase CEO Brian Armstrong and Kraken CEO David Ripley, among others, the committee said it wanted to hear from them about their debanking experiences.
“The Committee seeks to understand whether this pattern of debanking stems from financial institutions themselves or from government actors,” according to the letter. The committee is led by James Comer (R-Ky.).
Often, the House Financial Services Committee, Senate Banking Committee and a few other panels delve into crypto issues, so the House Committee on Oversight and Government Reform’s attention to crypto debanking is particularly new.
“The Oversight Committee is fairly new territory for the crypto industry,” said Ron Hammond, senior director of government relations at the Blockchain Association. “This committee is all about investigations and while debanking other industries has been a focus for that committee in the past, crypto debanking is a new territory.”
The committee’s letter marks the latest move among lawmakers to crack down on alleged debanking. Lawmakers, including House Financial Services Chair French Hill (R-Ark.), have vowed to investigate debanking and said his committee would take a “strong position.”
The Senate Banking Committee has also been alluding to future hearings on the topic, Hammond said.
“These investigations tend to get partisan quickly so it’ll be important to focus on fact-finding vs scoring political retribution points,” he said.
Crypto firms have complained about the difficulty behind establishing and maintaining bank accounts in the U.S. Following the collapse of crypto exchange FTX in late 2022, several governmental agencies, including the Federal Reserve, issued warnings on “crypto-asset risks.”
Later in 2023, Castle Island Ventures co-founder Nic Carter coined the phrase “Operation Choke Point 2.0” to describe the alleged crackdown coordinated by government agencies. The phrase is a reference to the Obama-era “Operation Choke Point,” a U.S. Department of Justice initiative that sought to limit banking services for industries considered high-risk for fraud and money laundering, including payday lenders and firearm dealers
Crypto exchange Coinbase also lodged a lawsuit against the Federal Deposit Insurance Corporation, through consultant firm History Associates, in June for allegedly cutting off the crypto industry from the banking sector. Meanwhile, the FDIC has said it does not discourage financial institutions from working with crypto.
“The Committee is concerned about the chilling implications this overreach may have in silencing industries arbitrarily disfavored by regulators, driving consequential technological and financial innovation overseas, and preventing targeted businesses from making payroll and paying employees their wages,” according to the letter.
That committee also said they are interested in First Lady Melania Trump’s experience with debanking, citing a section in her memoir where she wrote about the alleged incident.
“The weaponization of the financial system to defund, debank, or discredit crypto companies is un-American,” said Jonathan Jachym, global head of policy at Kraken, in a statement. “Kraken has advocated for the U.S. government to remove political activism from the banking system to ensure crypto companies are given fair access to banking services.”
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