OCC Sounds Alarm: Major Banks’ Crypto Debanking Practices Raise Red Flags

Regulators are calling out the gatekeepers.

The Office of the Comptroller of the Currency is putting major banks on notice over their approach to crypto clients. A practice known as 'debanking'—where financial institutions abruptly cut ties with digital asset businesses—is drawing intense scrutiny for potentially stifling innovation and pushing activity into less regulated corners of the market.

The Core of the Controversy

It's not about banning crypto. The OCC's concern centers on consistency and fairness. When large banks implement blanket policies that sever relationships with entire sectors, they may be overcorrecting for risk and violating their own stated frameworks. This creates a chilling effect, forcing legitimate companies to scramble for banking partners or operate in the shadows.

A Chokehold on Innovation?

This regulatory spotlight highlights a fundamental tension. Banks argue they're managing unprecedented risks—from compliance headaches to volatile asset prices. Crypto advocates fire back that this is a backdoor strategy to kill competition, using 'risk management' as a convenient shield. The result? A system where traditional finance gets to decide who plays the game, often after collecting hefty fees for the privilege.

The OCC's move signals that arbitrary debanking won't fly. It demands clear, risk-based reasoning from institutions that enjoy federal charters. For the crypto industry, it's a potential lifeline—a check on the power of banks to unilaterally decide which technologies deserve access to the financial rails. The message is clear: manage risk, don't just eliminate it. After all, what's a modern bank without a little old-fashioned gatekeeping?

‘Harmful Debanking Policies’

The preliminary findings from the OCC reveal troubling trends: between 2020 and 2023, these banks appeared to make unwarranted distinctions among customers based on their legal business activities. 

Specifically, many of these institutions maintained policies that either restricted access to financial services or required heightened scrutiny and approvals for certain clients. 

The OCC identified examples where at least one bank imposed limitations on various sectors, including crypto, due to their engagement in activities considered “contrary to [the bank’s] values,” even though those activities were not illegal.

Sectors affected by these policies included oil and gas exploration, coal mining, firearms, private prisons, tobacco and e-cigarettes, adult entertainment, and notably, digital assets. 

The findings indicated that many banks placed strict limitations on crypto-related activities as well, which often stemmed from concerns about financial crime.

These practices, the OCC confirmed, were prevalent at each of the banks examined in the review. Comptroller Jonathan V. Gould expressed frustration regarding the situation, stating: 

It is unfortunate that the nation’s largest banks thought these harmful debanking policies were an appropriate use of their government-granted charter and market power. 

Gould noted that while many of these policies were publicly announced, some banks have maintained that they did not participate in debanking.

In his comments, Comptroller Gould emphasized the OCC’s commitment to eliminating practices that WOULD “weaponize finance,” whether instigated by regulators or the banks themselves. 

National Banks To Facilitate Crypto Transactions

The agency disclosed that it is still evaluating “thousands of complaints” related to allegations of political and religious debanking, with plans to report on these findings “in due course.” The OCC aims to hold banks accountable for these actions and ensure that unlawful debanking practices do not persist. 

This follows Tuesday’s letter from the banking regulator that allows national banks to participate in “riskless principal transactions” involving cryptocurrencies. This permits national banks to buy and sell cryptocurrencies for their customers’ accounts. 

This new structure allows users to transact in crypto-assets through established national banks, resulting in a more regulated environment than exchanges that operate outside of strict oversight regulation. 

Featured image from DALL-E, chart from TradingView.com