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A16Z co -founder Marc Andreessen revealed on the Joe Rogan podcast on November 28 that 30 founders of technology were closed by US banks due to encryption.For this reason, on December 6 A16Z Crypto published a theory discussion “>Debanking: What you need to know “(Debanking, what you need to know).0xjs@0 0 0 Compilation, the full text is as follows:
“DEBANKING” (closed bank account) has been carried out behind the scenes for many years, but now it has become a topic of public discussion. Many people, policy makers, companies, and the most important entrepreneurs for American innovation stand out and talk about this.question.Because the cryptocurrency industry and specific agencies appear again and again in this discussion, here is a brief explanation to help distinguish between signals and noise.
But first of all, what is “Debanking”?
In short, Debanking means that the individual or entity who abides by the law accidentally loses the banking relationship, and may even be kicked out of the banking system.
Debanking is different from a certain entity that is suspected or confirmed to be engaged in fraud, money laundering or other illegal activities after some investigations or other procedures.
DEBANKING can occur without any obvious investigation, detailed interpretation, or notification in advance, and does not provide enough time for the entity to transfer funds.The most important thing is: there is no legitimate program, appeal procedure or other pursuit rights.
Why is this important?
We have developed fair bank rules to try to ensure that people are not discriminated against due to age, gender, marriage status, nationality, race, religion, etc.However, these rules do not restrict the right to refuse or revoke someone’s bank service rights at will.
therefore,Debanking can be used as a tool or weapon by a specific political actor/institution, which is systematically used to deal with private or industry without legitimate procedures.Imagine that if the government decides who can or cannot obtain electricity because of political stance or some arbitrary reasons … without explaining, investigating, notifications or remedial measures.This is the case.
Why debank?
Not all bank accounts are closed “Debank”.Banks can close their customers’ bank accounts for various reasons, including they think these customers are engaged in suspicious activities.Banks can also take the initiative to reduce the cost and workload of regulatory compliance by restricting the opening of certain individuals, industries or business models.
However, this legitimate event is not the reason why Debanking worry.on the contrary,Many DEBANKING worry about reporting from regulatory agencies’ illegal exercise of power. These regulatory agencies have impact the banks to cancel customers in some industries, or cancel the political factions or interests related to the political authorities that the political authorities do not like.This allows these regulators to exert power to the industry, although Congress has never authorized this power.
Banks usually acquire this pressure because they don’t want to conflict with regulators.Many banks do not want to deal with compliance issues, that is, bank regulatory agencies may apply additional inspections because they do not comply with regulations.
Where does the “throat action” come from?
In 2013, the US Department of Justice was discovered to start a fraud and money laundering survey for certain enterprises, which is a policy measure for the special working group of the Presidential Financial Fraud.This marks the transformation of the government’s strategy: the government no longer targets the illegal behavior of individual companies, but issues a subpoena to a bank and payment company, asking them to provide information about their customers’ high -risk or politically popular but legal business.
in other words,The government uses unspoken supervision to “cut off” financial services channels and close its accounts.(The U.S. Trade Association of the United States Banking Association at the time observed this at the time).In 2014, Frank Keating
When you become a banker, no one will give you a badge, and you will not put you on a judicial robe.So why do the Department of Justice tell the banker to act like a police officer and judge?The new investigation by the Ministry of Justice is called “Operation Choke Point”, which requires banks to identify customers who may be illegal or just do something that government officials do not like.
Due to the strong opposition of laws, Congress, and institutions, the plan was closed the following year.
now,“Operation Choke Point 2.0” this phrase is sometimes used to refer to the government’s bank business cut off the bank business of “political enemies and unpopular technology startups”EssenceOr in the words of others, this term refers to the relationship between banks “cutting off and being regarded as politically incorrect, extreme, dangerous or cross -border.”No matter how this term defines, it is a problem that affects both ends of the political spectrum and the entire political spectrum entity.
Which institutions are involved?
The internal operation of the “throat action” -and any other related or subsequent systemic designed to deprive the service of specific entities or industry banks -it is not known before, because the investigation (if so) is closed behind closed doors behind closed doors.The request of “Freedom of Information” is still unreasonable.However, on December 6, a court document display of such a case of information freedom of information,Federal deposit insurance company (FDIC)Instructed at least one bank (in a letter on March 11, 2022): “… At present, FDIC has not yet determined which regulatory documents need to be engaged in such activities (if so). Therefore, we respect you respectfully.Suspension all activities related to encrypted assets were suspended.
At the same time, we already know that the Special Working Group of the Primitive Financial Fraud Law Enforcement Law Enforcement (2013) includesFederal Deposit Insurance Corporation (FDIC) and Ministry of Justice (Doj)wait.Monetary Supervision (OCC)——In an independent institution under the US Ministry of Finance -obviously also participated in it,Central Bank of the United States -Federal Reserve Committee (FRB) also participated in itEssenceConsumer Finance Protection (CFPB)Also mentioned.
Note: The U.S. government is not the only country to implement the Debanking policy.Governments such as Canada have also used this strategy; Britain also had to investigate complaints on the government -led Debanking policy.
Why do the government do this?What is its effect?
Debanking has a variety of reasons. From cracking down payment processor fraud to preventing high -risk enterprises from conducting business, these companies may be considered to be more related to money laundering.These reasons are usually called “De-Risking”, not “Debanking”: “The business relationship between financial institutions to terminate or restricts the business relationship with large categories, rather than a targeted analysis and management of customer risks” “Essence
In a more extensive sense, De-Risking and Debanking can be used as “party tools”, and they are stifled for legal enterprises for political reasons.Another reason may be that some government agencies hope to have more free tailoring and power in determining that “where consumers can and where they can obtain loans, financial products and other banking services.”
It should be clear that the problem is not the performance of the duties of a specific government agency.The problem is that the government’s excessive intervention (or general abuse of power) of legal enterprises -there is no meaningful legitimate procedure, and it is not capable of restricting its behavior, and these behaviors are often carried out behind the scenes.Especially because there are sufficient legal and legal methods to supervise enterprises for legitimate reasons, such as providing consumer protection, preventing money laundering and stopping other criminal behaviors.
Using Debanking strategy will bring many unexpected consequences.Even if the goal is to truly protect consumers and banking systems, the result may be counterproductive, hinders consumers’ choices, or has a chilling effect on the entire business.These practices also destroy the U.S. government’s own policy goals, as the US Treasury’s Ministry of Finance’s Report (2023) pointed out:
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Eliminate financial activities outside the supervised financial system;
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Obstock or delay the smooth transfer of international development funds and humanitarian/disaster relief funds;
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Obstacles of low -income and middle -income groups and other groups with insufficient services to effectively use the financial system;
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Destroy the central position of the US financial system.
Finally, using the “Debanking” strategy may punish legal enterprises and individuals due to implication.For example, someone’s previous mortgage loan was revoked just because he worked in the open source foundation in the encryption industry.
For all the above reasons, many people describe the approach of Debanking as “African -style”.When DEBANKING target emerging technologies without difference, it is undoubtedly anti -innovation.
How big is the range of Debanking?
Although we cannot represent the entire industry or specific interests, butAs the venture capital investment in the encryption industry, we have witnessed at least 30 in the past four years.EssenceCoinbase also publicly stated that they discovered that at least 20 FDIC requesting banks’ suspension ‘or ‘stop providing’ or‘ do not continue ’to provide encrypted banking services.”
There may be more such cases.Because many entrepreneurs and small companies are worried about further retaliation or lack of resources to solve this problem, they have been hesitant, so this problem has not been reported.
For companies in our investment portfolio, many Debanking has occurred in companies that have not yet been profitable and have not yet issued tokens.Their bank account received venture capital funds (provided by institutions such as pension funds and university donations), which use these funds to use these funds for employee wages and ordinary business expenditures -just like other technology startups.
So what are the reasons for these companies?Whether it is written or (more common) verbal?The reasons for the list include “we do not provide cryptocurrency banking services”, and more common is: “Your account is closed due to compliance related issues. Please transfer all funds immediately.”These companies have also been informed of this, but they did not receive specific information about which “compliance” question. If there is really a problem, they cannot remedy.Finally, other reports received from the company include:
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It was told that “business compliance background team closed the account and prohibited us from opening any other account. No other reasons or appeal procedures were not explained.”
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He was rejected because of “lack of trust in all people who operate an encrypted company”;
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Received the inquiring letter and notification, bringing expensive cycles and unnecessary pressure to startups——Net compared with big companies, their operations are already streamlined.
