Federal banking regulators are likely contributing to the widespread debanking of #Bitcoin
@Dennis_Porter_
HUGE BRREAKING: New Paper reveals that federal banking regulators are likely contributing to the widespread debanking of #Bitcoin companies & indviduals. Urges states to offer critical banking solutions. Today, federal banking authorities dominate significant portions of the U.S. banking system. The trio of regulatory giants—The Federal Reserve, FDIC, and OCC—exert substantial control over access to even the most basic of banking services. Among these, the Federal Reserve is particularly pivotal due to its near-omnipotent authority over Federal Reserve Master Accounts. The immense effort by @CaitlinLong_ and @custodiabank to secure such an account underscores the challenge. Our team was dismayed to witness Custodia Bank’s rejection from accessing a Fed Master Account. While we support Custodia’s ongoing legal challenge to overturn this decision, passive observation is no longer an option. After extensive research, Satoshi Action has introduced a paper that begins to address and provide solutions to this deep-seated issue of discrimination within banking.
READ THE FULL PAPER & ONE PAGER: https://www.satoshiaction.io/debanking
The spotlight on this issue intensified following @nic__carter revelations about the pervasive banking discrimination against the crypto sector in America, known as Operation Chokepoint 2.0. Further Details on Chokepoint 2.0: https://coindesk.com/consensus-magazine/2023/03/22/the-reality-behind-the-crypto-banking-crackdown-operation-choke-point-20-is-here/…
At Satoshi Action, we believe that state governments have a crucial role in shielding #Bitcoinholders and businesses from such discrimination.
It’s time for states to leverage their authority within the dual banking system to defend industries and individuals who are politically marginalized.
Our latest paper, “Promoting State Financial Innovation: Enhancing State Banking Powers,” delves into the federal government’s control over the banking sector and explores potential strategies to counteract these challenges. Access the Full Paper: https://satoshiaction.io/debanking
Beyond the disturbing nature of these targeted political attacks against the #Bitcoinand digital asset businesses is the obvious, negative impact these actions have on the ecosystem. Companies impacted are forced to close shop or move their businesses overseas, or remain in a constant scramble to find new banking relationships. Any of these lead to the stunting of financial innovation and economic growth in the United States. We have the opportunity to keep the industry in the USA, but only if we act. The ultimate solution will vary from state-to-state given the unique dynamic of this problem, yet we are committed to helping those states, which hope to pursue positive policy outcomes, find the solution that fits their mold. —
PLEASE REACH OUT TO US IF YOU ARE A STATE LAWMAKER LOOKING FOR A SOLUTION.
WE HAVE A FEW.
— Maintaining a competitive edge in financial innovation within the United States is not just a matter of national interest but also a strategic necessity. As the global financial landscape evolves rapidly with advancements in technology, particularly in the realm of #Bitcoin and digital assets, the U.S. stands at a critical juncture. The ability to nurture and sustain innovation in this sector is imperative for economic growth and maintaining technological leadership.
The current regulatory environment, however, poses significant challenges to this objective. Stringent regulations and the often prohibitive barriers to entry for new #Bitcoin-related businesses can stifle innovation and push entrepreneurs and established companies to seek more favorable conditions abroad. This migration not only drains the U.S. of talent and economic potential but also risks ceding ground to other nations eager to capitalize on the benefits of leading the digital finance revolution.
To counteract this trend, it is essential for U.S. policymakers and regulators to foster a regulatory framework that encourages innovation while managing risks effectively. Moreover, states have a critical role to play. By leveraging their unique positions within the dual banking system, states can act as ‘laboratories of democracy’.
https://satoshiaction.io/debanking
Keeping innovation in the U.S. requires a concerted effort to overhaul current regulatory practices, empower state-level initiatives, and foster collaboration across sectors. Doing so will ensure that the U.S. not only remains at the forefront of the financial technology revolution but also secures its position as a global leader in #Bitcoin innovation.
In closing, I must give a special thank you to the people who helped us put this paper together of which there were many. But a special thank you must go to @ProfJulieHill and the Director of the Nebraska Department of Banking & Finance, Kelly Lammers for their input and assistance in this process.
@Dennis_Porter_
Marc Andreessen (@pmarca) just asked an important question — “who has been making these decisions” to debank tech, crypto, and Bitcoin founders? Management? Governemnt? The answer is, the banks themselves. But the reason they do it is totally out of their control.
I spoke to former federal regulators, debanked companies, and my team wrote an entire paper on this problem and how to solve it (paper below).
The federal regulators (OCC, FDIC, and the Federal Reserve) apply soft-power pressure to banks. Federal regulators started by classifying certain industries (such as crypto) as risky and by default any crypto account holders as a risk to any bank that banked them. If a bank is discovered to be banking “risky” businesses that gave Federal regulators the authority to dig deeper and audit the bank to see if anything else they are doing is “risky”. Banks don’t like to be audited. It’s expensive and time consuming. So banks “voluntarily” began to debank their “risky” customer. Also, a “risky” bank may have its FDIC payments (premiums) increase due to its “risky behavior” of banking risky industries. So the banks once again prefer to debank these customers voluntarily to avoid increased costs.
All in all the banks decided to debank the customers, but it’s because the federal regulators made it painful and expensive to bank crypto and tech founders.
Holder gave us the Too Big To Jail doctrine. Geithner blocked mortgage relief. Obama extended Bush’s tax breaks for the 1%.