GOP Vote To Remove Debanking Oversight After Promising To Fight Debanking

• On Wednesday, Senate Republicans voted almost unanimously to repeal a CFPB rule protecting consumers from illegal debanking through digital payment apps after gutting the agency in February
• The Joint Resolution was introduced following big tech's viral outcries on cryptocurrency debanking led by Marc Andreessen, inspired "Operation Chokepoint 2.0"
• After GOP promised to fight debanking, the repeal now moves for a vote to the House

a16z General Partner Marc Andreessen, who looks like a hard boiled egg that shops at Barnes and Noble, is not just a terrible sight to look at, but also an exceptionally untalented public speaker. Sitting through an entire Andreessen interview is hard enough as is – The only thing that makes it worse is when the wannabe celebrity Venture Capitalist strays from his usual jibber jabber on "American Dynamism", an a16z umbrella term for useless crypto tokens, equally useless AIs, and all things autonomous weapons and surveillance, to venture into blatant disinformation taken at face value by Millions of sad influencer fucks.

This is what happened in November, when Andreessen loudly complained about the political debanking of the crypto industry on the Joe Rogan Experience, leaving not even those who muted @pmarca years ago (me) any room to hide from his extraordinarily viral, yet largely false claims.

First, we should clarify that debanking is without a doubt an enormous issue threatening free speech and the very fabric of democracy. From Trump supporters to swaths of left-wing media, what the elite doesn't like loses access to financial services.

The basis for such debanking are Anti-Money Laundering and Countering the Financing of Terrorism regulations (AML/CFT), that are routinely weaponized to stifle dissent around the world. What makes politically motivated debanking so easy is that financial institutions are sworn to total secrecy towards consumers under threat of criminal penalties on the one hand, while no record keeping requirements exist to track and disclose the debanking of accounts on the other.

That means, whether a financial service debanked you because you unknowingly sent money to an account under investigation, or because of a Twitter post you made, is something you are likely never going to find out, making account closures and suspensions close to impossible to fight.

That being said, political debanking is not strictly illegal. Rather, the practice is governed under the term "reputational risk", describing industries and people that may raise increased money laundering and terrorist financing concerns, such as sex workers, people holding positions in public office, or people born in a country the US does not have friendly relations with, which are, let's be honest, quite a few.

What should also be noted is that financial institutions as well as financial service providers debank people with increased reputational risk not because they have an inherent political intent to shape society, but rather because a) AML/CFT programs are incredibly expensive to maintain, and b), AML/CFT enforcement is almost unbelievably arbitrary.

First, as reported by Lexis Nexis, global compliance cost surpassed 200 Billion US Dollars in 2023, trending up. This means that for many financial institutions and financial service providers, taking on persons with increased reputational risk – causing increased monitoring requirements – is often just not worth the buck.

Second, when a financial institution or financial service provider chooses to take on too many persons considered to be of reputational risk, regulators may claim deficiencies in their compliance programs – often without having to accuse them of a crime. In 2024 alone, regulators imposed fines of 4.3 Billion US Dollars globally – 95% of which stem from penalties imposed by the US, with a 522% year-on-year increase targeting banks, and a 100% increase for transaction monitoring violations compared to 2023.

The Tech Bro's Big Debanking Heist

Cryptocurrency has long been counted as an industry of increased reputational risk – an unfortunate circumstance that is arguably, just as the Biden administration's witch hunt on the industry, a result of at times inaccurate, often false, and non-scientifically monitored cryptocurrency surveillance analysis, compounded on by blatant fraud, crime, and theft by the Billions largely attributable to FTX, leading to widespread alarmist claims and the demonization of an entire industry.

As an advisor to the Department of Homeland Security Council, which, among other things, concerns itself with money laundering and the financing of terrorism, it should not be a stretch to believe that Marc Andreessen is well aware of the alleged AML/CFT risks concerning crypto. Yet Andreessen, on Joe Rogan, rather blamed a big tech conspiracy theory titled "Operation Chokepoint 2.0", published on Peter Thiel minion Mike Solana's Pirate Wires, penned by Castle Island Ventures co-founder Nic Carter.

Operation Chokepoint 2.0 – a reference to Operation 1.0, which alleged the coordinated suppression of financial services to the marijuana and firearms industry – is "the Biden Admin's coordinated, ongoing effort across virtually every US financial regulator to deny crypto firms access to banking services," Carter writes.

While such an effort undoubtedly existed, Carter's – and the industry's – explanation for the debanking of crypto firms fails to assert any constructive reasoning for why crypto has been debanked, beyond empty its-clearly-because-they-don't-like-us, crypto-is-threatening-legacy-banking(tm) rhetoric. Armed with little more than anecdotal evidence, let us embrace the tech-banker's victimhood of choice for a moment.

Custodia Bank's Caitlin Long points towards being denied access to the Federal Reserve System because "the far left doctrinally redefined 'democracy' to mean a consensus of institutions rather than individuals", quoting Andreessen. "THIS MADE IT MAKE SENSE," Long writes. Of course, this is a much more plausible explanation than concerns on AML compliance, as stated in the original letter denying Custodia access to the FED.

Meanwhile, Lightspark CEO David Marcus suggests that his absolute dumpsterfire of a Facebook-owned stablecoin called Libra (then Diem), too, fell victim to Operation Chokepoint 2.0, in a lenghty post on X. "Gee, that sounds familiar," comments Long. "Someday, like you just did, I’ll be able to tell the real story of what the Fed did to Custodia Bank, and how the Fed lied to achieve Biden/Warren political aims. There is so much corruption & I’m glad it’s pouring out in public now" – despite the fact that Libra effectively died under the first Trump administration, possibly because it marketed itself as a dry run for a CBDC.

Most prominently, Chief Legal Officer Paul Grewal cites documents obtained from the Federal Deposit Insurance Corporation (FDIC) via FOIA requests, after the agency issued pause letters to stop banking crypto firms to financial institutions.

While the documents obtained by Coinbase did give seldom before seen insight into the risk assessments made shaping regulatory compliance, Grewal, too, appears incapable of making out a cause. "The contents are a shameful example of a government agency trying to cut off financial access to law-abiding American companies" he writes. As with all Chokepoint 2.0 stories, the reader never finds out whether said access was cut off because the sky is blue, or maybe, as the documents state, as a precaution to “gain an understanding of how the bank will ensure continued safe and sound operation as this activity is implemented”.

In the Chase business podcast The Unshakeables, JP Morgan Chase CEO Jamie Dimon finally sheds light on the topic: "We have not debanked anyone because of political or religious relationships, period." Instead Dimon, as elaborated in detail above, states that the bank must follow laws on anti-money laundering, and carefully.

Grewal, who posted a screenshot of the transcript of Dimon's statements, yet merely highlights Dimon's remarks that Andreessen is correct in stating that if the institution fails to debank someone, it may face hundreds of millions of Dollars in fines. "Debanking isn't a conspiracy in our heads. Debanking is all too real," Grewal captions the image, demonstrating a truly admirable capability for functional literacy. Rumor has it he is wondering what the true cause of debanking is to this day.

What is rightfully infuriating about the techbro's debanking conversation is that rather than addressing the very real underlying issues inherent to AML/CFT, crypto debanking turned into a coordinated disinformation campaign against "the left", a term mentioned 13 times in Carter's follow up to the Joe Rogan interview. In his write up, Carter addresses reasonable criticisms of Andreessen's claims, such as issued by The Intercept's Lee Fang:

"There’s a huge issue re debanking. We saw anti-Covid mandate truckers losing access to bank accounts over activism, pro-Palestinian orgs losing access to Venmo, etc. But now predatory lenders & scammers are conflating consumer protection w/ “debanking” to call for deregulation."

But Fang "resents crypto and fintech and does not consider firms in those industries valid debanking victims" writes Carter, despite calling exactly for what Fang alleges less than two weeks later in the New York Times: "that he wants legislation that would protect crypto firms’ privileges."

Now the tech bros are cashing in on their self-made conspiracy – regardless of the fact that their viral claims are void of any factual reality – by organizing against their common enemy: the Consumer Financial Protection Bureau (CFPB).

The CFPB As Big Tech's Lucrative Boogeyman

The CFPB is "Elizabeth Warren's personal agency that she gets to control," Andreessen told Rogan. This agency, Andreessen continued, prevents "new competition and new startups that want to compete with the big banks” by “terrorizing them who try to do anything in financial services” by “you know, debanking, it’s where a lot of the debanking comes from, these independent agencies.”

Last year, the a16z backed startup LendUp was fined $40 Million by the CFPB for misleading consumers, reimbursing almost 120,000 of its customers.

Despite widespread public outcry that the CFPB is not, in fact, an agency engaged in debanking, but an agency that prevents debanking, leading even Andreessen to peddle back his claims, Carter doubled down: the CFPB was established "to effectively harass fintechs and banks."

Since 2012, the CFPB has enforced $19.7 Billion in consumer relief on financial institutions, spanning monetary compensation to consumers, principal reductions, canceled debts, and other consumer relief ordered, in cases involving illegal high-interest loans and false advertising, charging illegal "junk fees" and withholding credit card rewards, illegal discrimination against ethnic groups, and the conduction of illegal rental background checks.

In December, the CFPB had set its sight on digital payment apps, finalizing a rule titled Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications that qualifies digital financial service providers facilitating more than 50 Million transactions per year – such as payment apps like Zelle, Venmo, or PayPal – to fall under CFPB oversight.

The rule was widely lobbied against by tech industry giants like Elon Musk, who feared that his plans to expand his platform X into digital payments may be threatened. The CFPB currently holds hundreds of complaints against Tesla's financing arm.

"RIP CFPB", Musk posted on X in February, shortly before Trump's inauguration. Gutting the agency was one of the administration's first orders of business.

"100% the right call," co-founder and CEO of Coinbase Brian Armstrong quoted Musk's post. "The CFPB is unconstitutional on the face of it. And even if it wasn’t, it should be deleted as we already have DOJ to prosecute fraud, and (many) other financial services regulators. It’s an activist organization that has done enormous harm to the country."

The CFPB currently holds almost 8,000 consumer complaints against Coinbase, ranging from account freezes to the listing of potential scams; not to mention the countless posts on X complaining about no-notice account closures. Next to privacy and surveillance issues as well as errors and fraud, it is these account closures that the CFPB's rule is meant to address.

"Given the volume of payments consumers make through many popular payment apps, consumers can face serious harms when they lose access to their app without notice or when their ability to make or receive payments is disrupted. Consumers have reported concerns to the CFPB about disruptions to their lives due to closures or freezes," the CFPB stated on fighting debanking.

The GOP seemed to agree: "Stopping debanking will continue to be an important priority for @senateGOP," senator Tom Cotton posted on X. Yet almost all republicans voted in favor of repealing the CFPB's rule on Wednesday, addressing a Joint Resolution introduced last week that now moves for a vote to the House.

With an enormous amount of access to political capital, the tech industry could have chosen to use the viral debanking conversation toward reforming the Bank Secrecy Act, saving hundreds of Millions of US Americans from unwarranted, dragnet surveillance, while at the same time saving banks Billions in compliance costs.

Instead, big petty tech chose to get rid of the only agency representing consumers to save itself from enforcement action against its questionable practices, without any effect on the expansion of citizen freedoms and liberties at all.

As former Coindesk Chief Insights Columnist David Z. Morris writes in his newsletter Dark Markets: "a certain cadre of self-serving, feckless narcissist has chosen this moment to blame debanking for their own hilarious, self-inflicted failures. These victim cosplayers have muddied the waters about the entire issue with their bullshit."

Operation Chokepoint 2.0 may be the biggest heist the crypto industry has pulled to this day, going to prove that under Trump, it's big tech's world – and we'll all be paying for it.

Independent journalism does not finance itself. If you enjoyed this article, please consider donating to our Geyser Fund.