President Trump signs executive order to stop ‘unfair banking’ of crypto industry

President Donald Trump signed an executive order on Thursday to prevent federal regulators from targeting financial institutions that engage with the crypto industry.

"The digital assets industry has also been the target of unfair debanking initiatives," a fact sheet released by the White House states. "These practices erode public trust in banking institutions and regulators, harm livelihoods, freeze payrolls, and impose significant financial burdens on law-abiding Americans."

The order removes "reputational risk," which the Federal Reserve has defined as the "potential that negative publicity regarding an institution's business practices, whether true or not, will cause a decline in the customer base, costly litigation, or revenue reductions," as a reason for increased oversight from regulators. The term isn't specific to crypto, but critics claim regulators have used that authority to target the digital asset industry.

Trump had been rumored to sign such an executive order for a few months, following "debanking" complaints from crypto industry firms and individuals who say banks have unfairly closed their accounts. Trump had promised to put an end to "Operation Choke Point 2.0," which refers to actions taken by federal regulators to restrict how financial institutions engage with the crypto industry. 

The phrase was coined initially by Castle Island Ventures co-founder Nic Carter in 2023, drawing a comparison to Operation Choke Point, a 2013 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.

The issue has also come up in Congress where Senate Banking Committee Chair Tim Scott has been looking to push a bill that would "curtail the weaponization of federal banking agencies by eliminating the ability for regulators to use reputational risk as a component of supervision."

Regulators within the federal government including the Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have already pledged to stop weighing "reputational risk" when evaluating banks' customer relationships.

Republican lawmakers chimed in after Trump signed the order. House Financial Services Committee Chair French Hill, R-Ark., called it an "important step."

"Targeting Americans for their political beliefs undermines the freedoms our country was built upon and should have no place in our financial system," Hill said in a statement. "I comment President Trump for taking decisive action to protect all Americans from politically motivated financial discrimination." 

Sen. Cynthia Lummis, R- Wyo., echoed a similarly supportive sentiment.

"Under the Biden administration, Operation Chokepoint 2.0 emboldened unelected bureaucrats to unfairly pick winners and losers based on their political preferences rather than sound policy," Lummis said in a post on X. "President Trump's executive order is a critical step in bringing transparency and accountability to a system that has been able to lord over the digital asset industry for far too long and I applaud his administration's efforts to prevent further debanking of lawful industries." 

Updated at 8:30 p.m. UTC time to include lawmakers' comments

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