Senate Banking Committee hearing focuses on "debanking" of crypto firms; witnesses blame regulators and vague "reputational risk" standards

At a Senate Banking Committee hearing, senators heard testimony from cryptocurrency firms, bankers and legal experts who said banks and federal regulators pressured banks to cut off services to crypto companies — a practice witnesses and some lawmakers described as “debanking.”

The testimony centered on Anchorage Digital, Old Glory Bank and written and internal supervisory documents released by regulators. Nathan Macaulay, chief executive officer and cofounder of Anchorage Digital, said his OCC‑chartered crypto bank was effectively shut out of the federal banking system despite holding a national bank charter. “One day in June of 2023, we received an urgent email from the bank saying they need to speak with us that day…they told us they were closing our account in 30 days because they were not comfortable with our crypto clients and their transactions,” Macaulay said.

The hearing drew lines between regulatory guidance and bank behavior. Steven Gannon, partner at Davis Wright Tremaine and a former senior legal executive at large banks, told the committee that regulators rely on broad, subjective concepts such as “reputational risk,” safety and soundness and management assessments that can be reinterpreted in supervisory reviews. “Reputation risk does not relate to the financial condition of a bank, but rather on how an examiner perceives the reputation of the bank,” Gannon said.

Mike Ring, president and chief executive of Old Glory Bank — founded as a market response to debanking complaints — described building a bank that markets itself as friendly to customers who said they had been denied service elsewhere. Ring said Old Glory Bank grew from $10 million in deposits at launch to roughly $170 million in deposits and from 300 customers in its originating branch to more than 50,000 customers across all 50 states. “We are a community bank that does do character loans and we would love to have your business,” Ring told the panel.

Witnesses and senators pointed to a string of supervisory actions and informal guidance as a practical cause of industry‑wide retrenchment. Macaulay and others cited what they described as a joint statement from the Federal Reserve, the FDIC and the OCC in January 2023 and cited FDIC supervisory materials and other regulator guidance as contributing to banks’ unwillingness to serve crypto clients. Gannon told senators that informal supervisory directives, pause letters and other non‑rule guidance can produce de facto prohibitions that were not enacted through notice‑and‑comment rulemaking.

Senators from both parties expressed concern about small businesses and innovators that depend on access to banking. Several senators said they supported legislative and market remedies, although they differed on whether more banks or more regulatory clarity is the right priority.

The hearing included multiple committee members and witnesses urging greater transparency and, in some cases, accountability for past supervisory practices tied to “operation choke point” analogies. Some senators said market solutions such as new banks and fintechs will help; others called for statutory or supervisory guardrails to prevent subjective supervisory decisions from cutting lawful businesses out of the payment and deposit systems.

The hearing record and the witnesses’ written testimony will remain part of the committee record; senators gave staff and witnesses deadlines to submit additional materials and follow‑up responses.

The hearing combined personal testimony from affected firms, legal analysis of supervisory discretion and policy arguments over whether the primary problem is bank compliance choices, regulators’ guidance, or a combination of both. The panel repeatedly returned to the same operational claim: banks often cite regulatory risk as the reason to end relationships with lawful customers, and supervisors’ broad discretion can make that risk irreversible.

The committee did not adopt new rules at the hearing; members asked for documentary records, follow‑up answers and further hearings on related topics.