Senate Banking Committee hears testimony on ‘‘debanking’’ of legal businesses and consumers

The Senate Banking, Housing, and Urban Affairs Committee held a full-committee hearing on Feb. 5 examining the phenomenon commonly called “debanking,” with witnesses from the crypto industry, banking law and policy experts describing how legal firms and individuals have lost access to bank services.

The hearing, chaired by Senator Tim Scott, focused on accounts being closed or denied without apparent explanation and on whether regulators and large banks had pressured or otherwise shut out lawful customers. Senator Elizabeth Warren, the committee’s ranking member, said the volume of complaints indicated a real problem: “Debanking is a real problem, and it’s something that I hope we can work on together,” she said, noting her staff’s review of 11,955 Consumer Financial Protection Bureau complaints in the past three years.

Nathan McCauley, chief executive officer and co‑founder of Anchorage Digital, told the committee that Anchorage — which holds an OCC conditional bank charter and custodial relationships for institutional crypto clients — was told by a partner bank in June 2023 that its account would be closed in 30 days. “They told us they were closing our account in 30 days because they were not comfortable with our crypto clients and their transactions,” McCauley said. He described repeated rejections by roughly 40 other…