"Debanking", when a legitimate person or entity loses its relationship with a bank without due process or notice, and fails to obtain remedies, raises concerns about regulatory abuses and unfair repression of legitimate industries. This article is derived from the article "Debanking: What you need to know" by a16z, which was compiled, compiled and written by Vernacular Block. (Synopsis: a16z Analysis 2025 encryption trends: AI Wallet self-care, Decentralization chatbots, asset tokenization, on-chain bonds. (Background added: a16z executives call on Trump: After being elected, how should the US government seize the Web3 opportunity? The phenomenon of "debanking," which has been happening behind the scenes for years, is once again a topic of public discussion, with many individuals, policymakers, companies, and especially entrepreneurs critical to American innovation speaking out on the issue. Since the encryption industry and specific institutions are frequently mentioned in this discussion, the following is a brief description of this phenomenon to help distinguish truth from noise. What is "debanking"? In simple terms, "debanking" refers to the unexpected loss of a relationship with a bank by a law-abiding individual or entity, and possibly even kicked out of the banking system. "Debanking" is not the same as losing banking services due to suspected or confirmed involvement in fraud, money undering or other illegal activities. Such cases usually go through some kind of investigation or procedure. "Debanking" may occur without any obvious investigation, elaboration or advance notice, and without giving the entities involved sufficient time to move the funds. More importantly, there is no due process, appeal mechanism or other avenues of redress in this process. 1) Why is this important? We have fair banking rules in place to ensure that people are not discriminated against on the basis of age, gender, marital status, nationality, race, religion, etc. But there are currently no rules restricting banks (or their regulators) from arbitrarily depriving or canceling someone's right to access banking services. Therefore, "debanking" may be used as a tool or weapon by certain political actors or institutions to systematically target private individuals or industries without due process. Imagine if the government decided who could and could not use electricity solely because of political stance or some arbitrary reason, without explanation, investigation, notification or relief, this is a true reflection of the problem of "debanking". 2) Why is it "debanked"? Not all bank account closures are "debanked". It is reasonable for banks to close customer accounts for a number of reasons, such as suspecting that customers are engaged in suspicious activity. In addition, banks may actively choose to reduce the cost and burden of regulatory compliance, thereby limiting their exposure to certain individuals, industries or business models. However, legitimate behavior is not the cause of "debanking" that triggers follow. The concern for many is reports that regulators may have illegally abused their power to unduly pressure banks to stop serving customers in certain industries or to terminate relationships with customers with specific political affiliations or positions. This allows these regulators to exert influence over the industry, even if Congress does not give them that power. Banks often bow to this pressure because they don't want to confront regulators. Many banks are also reluctant to deal with compliance hassles or extra checks that may come with non-cooperation. What is the origin of the "Choke Point" operation? In 2013, the U.S. Department of Justice, as a policy initiative of the President's Financial Fraud Enforcement Task Force, launched an investigation into alleged fraud and Money Laundering by certain businesses. This marks a shift in the government's strategy: no longer taking action solely against individual companies for alleged violations, but by issuing subpoenas to banks and payment companies for information related to high-risk or politically undesirable (but legitimate) customers. In other words, the government used its regulatory powers to improperly "cut off" the financial services of certain firms, shutting down accounts to curb industries that the executive branch did not support (this was pointed out by the president of the American Banking Association at the time). In 2014, Frank Keating, former president and CEO of the American Banking Association and former governor of Oklahoma, wrote in an opinion piece in the Wall Street Journal: "When you become a banker, no one will give you a badge or tailor a robe for you. So why does the Justice Department require bankers to act like police officers and judges? The Justice Department's new investigation, known as 'Choke Point,' requires banks to identify customers who may be breaking the law or are simply undesirable to government officials." The program was halted the following year due to strong opposition from the law, Congress and related agencies. Today, the term "Operation Choke Point 2.0" is sometimes used to refer to the government's targeting of "political enemies and unpopular tech startups" through "debanking." Or, as others put it, the term refers to banks cutting off contact with certain customers deemed "politically incorrect, extreme, dangerous or uncompliant." Whatever definition, the issue affects both ends of the political spectrum and all affected entities. Which institutions are involved? The exact mechanism of Operation Choke Point, as well as any related or subsequent systematic debankment initiatives, was previously unclear because the investigations, if any, were conducted in secret and Freedom of Information Act (FOIA) requests are pending. However, a March 11, 2022 Federal Deposit Insurance Corporation (FDIC) letter (as evidence in court records) shows that the agency instructed a bank: "At this time, the FDIC has not determined whether banks are required to file any regulatory filings to engage in such activities." Therefore, we kindly ask you to suspend all activities related to Encryption's assets. In this case, multiple similar FDIC letters were submitted as evidence. In addition, we know that the Financial Fraud Enforcement Task Force that implemented Choke Point Action 1.0 in 2013 included agencies such as the FDIC, the Department of Justice (DOJ), and others. The Office of the Comptroller of the Currency (OCC), an independent agency of the U.S. Treasury, and the Federal Reserve (FRB) are also involved. The Consumer Financial Protection Bureau (CFPB) has also been mentioned. It is important to note that the United States is not the only country that has implemented debanking. It has also been used in other countries, such as Canada; The UK has also launched an investigation into government-led complaints of debankation. Why is the government doing this? What are the implications? The rationale for debankment includes cracking down on payment processing fraud and preventing high-risk businesses from doing business, as these businesses may be considered more relevant to Money Laundering activities. However, these initiatives are often referred to as "de-risking", i.e. "the Financial Institution indiscriminately terminates or restricts business relationships with certain types of clients, rather than specifically analysing and managing client risk". In a broader context, de-risking and de-banking can be used as a "partisan tool" to crack down on legitimate businesses for purely political reasons. Another possible reason is that certain government agencies want greater discretion and power to determine "where and under what circumstances consumers can access loans, financial products and other banking services." To be clear, the problem is not whether a government agency is doing its job, but excessive government interference (or abuse of power) in legitimate businesses, which often lacks due process and effective restrictions, and is mostly done behind the scenes. In particular, existing laws and legal means are sufficient to regulate ...
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a16z analysis: The hidden harm of centralized banks 'arbitrarily freezing account'
"Debanking", when a legitimate person or entity loses its relationship with a bank without due process or notice, and fails to obtain remedies, raises concerns about regulatory abuses and unfair repression of legitimate industries. This article is derived from the article "Debanking: What you need to know" by a16z, which was compiled, compiled and written by Vernacular Block. (Synopsis: a16z Analysis 2025 encryption trends: AI Wallet self-care, Decentralization chatbots, asset tokenization, on-chain bonds. (Background added: a16z executives call on Trump: After being elected, how should the US government seize the Web3 opportunity? The phenomenon of "debanking," which has been happening behind the scenes for years, is once again a topic of public discussion, with many individuals, policymakers, companies, and especially entrepreneurs critical to American innovation speaking out on the issue. Since the encryption industry and specific institutions are frequently mentioned in this discussion, the following is a brief description of this phenomenon to help distinguish truth from noise. What is "debanking"? In simple terms, "debanking" refers to the unexpected loss of a relationship with a bank by a law-abiding individual or entity, and possibly even kicked out of the banking system. "Debanking" is not the same as losing banking services due to suspected or confirmed involvement in fraud, money undering or other illegal activities. Such cases usually go through some kind of investigation or procedure. "Debanking" may occur without any obvious investigation, elaboration or advance notice, and without giving the entities involved sufficient time to move the funds. More importantly, there is no due process, appeal mechanism or other avenues of redress in this process. 1) Why is this important? We have fair banking rules in place to ensure that people are not discriminated against on the basis of age, gender, marital status, nationality, race, religion, etc. But there are currently no rules restricting banks (or their regulators) from arbitrarily depriving or canceling someone's right to access banking services. Therefore, "debanking" may be used as a tool or weapon by certain political actors or institutions to systematically target private individuals or industries without due process. Imagine if the government decided who could and could not use electricity solely because of political stance or some arbitrary reason, without explanation, investigation, notification or relief, this is a true reflection of the problem of "debanking". 2) Why is it "debanked"? Not all bank account closures are "debanked". It is reasonable for banks to close customer accounts for a number of reasons, such as suspecting that customers are engaged in suspicious activity. In addition, banks may actively choose to reduce the cost and burden of regulatory compliance, thereby limiting their exposure to certain individuals, industries or business models. However, legitimate behavior is not the cause of "debanking" that triggers follow. The concern for many is reports that regulators may have illegally abused their power to unduly pressure banks to stop serving customers in certain industries or to terminate relationships with customers with specific political affiliations or positions. This allows these regulators to exert influence over the industry, even if Congress does not give them that power. Banks often bow to this pressure because they don't want to confront regulators. Many banks are also reluctant to deal with compliance hassles or extra checks that may come with non-cooperation. What is the origin of the "Choke Point" operation? In 2013, the U.S. Department of Justice, as a policy initiative of the President's Financial Fraud Enforcement Task Force, launched an investigation into alleged fraud and Money Laundering by certain businesses. This marks a shift in the government's strategy: no longer taking action solely against individual companies for alleged violations, but by issuing subpoenas to banks and payment companies for information related to high-risk or politically undesirable (but legitimate) customers. In other words, the government used its regulatory powers to improperly "cut off" the financial services of certain firms, shutting down accounts to curb industries that the executive branch did not support (this was pointed out by the president of the American Banking Association at the time). In 2014, Frank Keating, former president and CEO of the American Banking Association and former governor of Oklahoma, wrote in an opinion piece in the Wall Street Journal: "When you become a banker, no one will give you a badge or tailor a robe for you. So why does the Justice Department require bankers to act like police officers and judges? The Justice Department's new investigation, known as 'Choke Point,' requires banks to identify customers who may be breaking the law or are simply undesirable to government officials." The program was halted the following year due to strong opposition from the law, Congress and related agencies. Today, the term "Operation Choke Point 2.0" is sometimes used to refer to the government's targeting of "political enemies and unpopular tech startups" through "debanking." Or, as others put it, the term refers to banks cutting off contact with certain customers deemed "politically incorrect, extreme, dangerous or uncompliant." Whatever definition, the issue affects both ends of the political spectrum and all affected entities. Which institutions are involved? The exact mechanism of Operation Choke Point, as well as any related or subsequent systematic debankment initiatives, was previously unclear because the investigations, if any, were conducted in secret and Freedom of Information Act (FOIA) requests are pending. However, a March 11, 2022 Federal Deposit Insurance Corporation (FDIC) letter (as evidence in court records) shows that the agency instructed a bank: "At this time, the FDIC has not determined whether banks are required to file any regulatory filings to engage in such activities." Therefore, we kindly ask you to suspend all activities related to Encryption's assets. In this case, multiple similar FDIC letters were submitted as evidence. In addition, we know that the Financial Fraud Enforcement Task Force that implemented Choke Point Action 1.0 in 2013 included agencies such as the FDIC, the Department of Justice (DOJ), and others. The Office of the Comptroller of the Currency (OCC), an independent agency of the U.S. Treasury, and the Federal Reserve (FRB) are also involved. The Consumer Financial Protection Bureau (CFPB) has also been mentioned. It is important to note that the United States is not the only country that has implemented debanking. It has also been used in other countries, such as Canada; The UK has also launched an investigation into government-led complaints of debankation. Why is the government doing this? What are the implications? The rationale for debankment includes cracking down on payment processing fraud and preventing high-risk businesses from doing business, as these businesses may be considered more relevant to Money Laundering activities. However, these initiatives are often referred to as "de-risking", i.e. "the Financial Institution indiscriminately terminates or restricts business relationships with certain types of clients, rather than specifically analysing and managing client risk". In a broader context, de-risking and de-banking can be used as a "partisan tool" to crack down on legitimate businesses for purely political reasons. Another possible reason is that certain government agencies want greater discretion and power to determine "where and under what circumstances consumers can access loans, financial products and other banking services." To be clear, the problem is not whether a government agency is doing its job, but excessive government interference (or abuse of power) in legitimate businesses, which often lacks due process and effective restrictions, and is mostly done behind the scenes. In particular, existing laws and legal means are sufficient to regulate ...