- After Marc Andreessen, co-founder of a16z, participated in a recent interview on Joe Rogan’s podcast, numerous executives from the cryptocurrency sector shared their experiences with debanking.
- The industry anticipates a more supportive administration under Donald Trump, particularly in light of several campaign promises that favor cryptocurrency, including the termination of “Operation Choke Point 2.0.”
- These developments suggest a potential shift in the regulatory landscape for the cryptocurrency industry, as stakeholders look forward to a more accommodating political environment.
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After a16z co-founder Marc Andreessen revealed on Joe Rogan’s podcast that 30 founders had been debanked over the past four years, several crypto executives have come forward to discuss what they refer to as “Operation Choke Point 2.0.”
Operation Choke Point 2.0 is said to involve targeted efforts to cut off crypto businesses from financial services, coinciding with increased regulatory scrutiny. It draws comparisons to Operation Choke Point 1.0, a 2013 U.S. Department of Justice initiative aimed at limiting banking access for industries deemed high-risk for fraud, such as payday lenders and firearms dealers.
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Andreessen claimed that the government exerted pressure on banks to close accounts tied to crypto and other sectors. Although banks as private entities can choose their customers, this alleged intervention has raised concerns about overreach and its impact on emerging industries.
Discussing the chilling effect, Andreessen remarked, “Remember the crypto thing—everyone got excited about NFTs and all that stuff, and then it just stopped. The reason it stopped is because almost every crypto founder or startup got debanked personally, forced out of the industry, or saw their company’s accounts closed, making operations impossible. Others faced prosecution or threats of legal action.”
SEC Actions and Industry Challenges
Andreessen pointed out that the Securities and Exchange Commission (SEC) has issued numerous Wells Notices to crypto firms under the current administration, including Uniswap Labs, Robinhood Crypto, and OpenSea. These notices, which inform firms of potential enforcement actions, have made it increasingly difficult for these companies to access banking services or conduct business. “The SEC has been trying to kill the crypto industry under Biden, and this has been a big issue for us because we’re the biggest crypto startup investor,” Andreessen remarked.
After Elon Musk highlighted Andreessen’s interview on X and asked, “Did you know that 30 tech founders were secretly debanked?” many in the crypto industry came forward to share their experiences.
“Yeap. That’s my reality,” said Tornado Cash co-founder Roman Storm. Notably, the U.S. Fifth Circuit Court of Appeals ruled the same day that the Treasury Department’s Office of Foreign Assets Control (OFAC) had exceeded its authority in sanctioning the cryptocurrency mixer. Adding to the irony, Storm revealed the next day, “I was just debanked again today. I’ve lost count of how many times it’s happened in the last 2.5 years.”
We had no U.S. banking for several years
Caitlin Long, CEO of the Wyoming-chartered special purpose depository institution Custodia Bank, shared that her company had experienced repeated instances of debanking. She also highlighted Custodia’s ongoing lawsuit against the Federal Reserve, which had denied the bank’s application for membership in its system. Oral arguments in the case are scheduled for the day after Trump’s inauguration on January 20.
Tyler Winklevoss, co-founder of Gemini, revealed that he and his crypto exchange had been debanked due to their involvement in the industry. “The number is probably much larger than 30; that’s just within the a16z portfolio alone,” he stated. Fellow co-founder Cameron Winklevoss added, “Between myself, @tyler, @winklevosscap, and @Gemini, we’ve lost more bank accounts than you can count on two hands.”
Kraken co-founder Jesse Powell also weighed in, saying, “We had no U.S. banking for several years while one U.S. company enjoyed a monopoly secured by its heavyweight investors. That singular bank was recently assassinated. We barely survived by focusing on Europe. Kraken has too many stories of clients and employees losing U.S. banking.”
Responding to Musk’s question, Coinbase CEO Brian Armstrong confirmed the claim, calling it “one of the most unethical and un-American things that happened in the Biden administration.” Armstrong suggested this issue was a significant factor in the Democrats losing the election. He also noted that Coinbase is still collecting information through FOIA (Freedom of Information Act) requests and expressed hope that the full story, including potential legal violations, would come to light.
After Trump’s victory and amid others in the crypto industry speaking out, Frax Finance founder Sam Kazemian shared his experience for the first time. “I kept quiet about this for almost a year out of fear, but since I’m in good company with @tyler, @cameron, @brian_armstrong, and @elonmusk now… Last December, I got a call from JPM saying, ‘We have to close anyone’s account whose primary source of income/wealth is crypto. This is directly from the top from Jamie. I’m really sorry.’”
Kazemian explained that he had refrained from speaking out earlier due to concerns about losing access to his remaining banking and payment processing accounts. “I had a close relationship with my banker, so I assume 99% of people wouldn’t even get that kind of transparency or explanation. It’s real. It happened. Hopefully, now it will soon be over.”
Debanking and Crypto Regulation: A Complex Landscape
Among Donald Trump’s many campaign promises to the crypto industry were commitments to shut down the so-called Operation Choke Point 2.0 and to establish a regulatory framework more favorable to cryptocurrency businesses. These pledges have sparked debate among industry leaders over the future of crypto in the U.S.
Castle Island Ventures partner Nic Carter, a vocal critic of debanking practices, reflected on his own experience of being “derisked” by his primary bank in 2016. “Everyone in crypto has had their personal banking situation negatively impacted to some degree,” he said, emphasizing the broader impact on startups. “What we’re more focused on is the debanking of crypto startups in the U.S. I can attest to the fact that every single one of our ~100 portfolio companies has dealt with it.”
Even after the U.S. elections, Carter claimed that the Federal Deposit Insurance Corporation (FDIC) maintained a 15% cap on depository limits for banks working with crypto firms. “Trump needs to absolutely clean house,” he stated. Custodia Bank’s Caitlin Long concurred, adding, “It’s more than that. The FDIC and Fed are still pressuring banks to exit crypto entirely, as recently as 10 days ago.”
Some, however, argued that the challenges facing crypto businesses were not part of a targeted effort but rather a result of broader legal issues. Many companies have faced lawsuits for allegedly defrauding consumers, which has inadvertently affected their ability to access banking services.
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