Coinbase Pushes Back Against “Political” Banking Rule Used to Pressure Crypto Firms
Coinbase is formally challenging what it calls a “political” banking rule, saying it was used to pressure banks into cutting ties with crypto companies. The move adds fuel to the ongoing debate in the U.S. over “debanking” and whether regulators are overstepping their authority.
In a public statement and a detailed letter to federal regulators, Coinbase accused banking supervisors of misusing the idea of “reputational risk” to quietly restrict legal crypto activity during the Biden administration.
Backing the Plan to Remove Reputational Risk
Faryar Shirzad, Coinbase’s chief policy officer, said the company supports a proposal by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) to remove reputational risk from how banks are supervised.
According to Shirzad, regulators at both agencies used reputational risk as a “supervisory hammer” to push banks into dropping crypto clients—a tactic the industry calls “Operation Chokepoint 2.0.”
Coinbase argued that reputational risk is vague and subjective, with no measurable link to actual financial or legal harm. The company says supervision should focus only on concrete risks like credit, liquidity, operations, and compliance. Using public perception as a reason to restrict banks, Coinbase warns, opens the door for political bias.
Experiencing Pressure Firsthand
Coinbase said it experienced these pressures directly. Through Freedom of Information Act requests and lawsuits, the company uncovered internal communications suggesting that crypto firms were singled out behind the scenes. According to Coinbase, these actions threatened its operations and disrupted banking access for employees, showing a pattern of secret supervision with little accountability.
The company is urging regulators to go further than the current proposal, fully banning the use of reputational risk or similar concepts in bank oversight. Partial limits, Coinbase says, could allow the practice to return under a different name.
Part of a Bigger Debate
This dispute is part of a larger political fight over crypto debanking in the U.S. Crypto executives and some lawmakers have long argued that regulators used informal guidance, scrutiny, and off-the-record warnings to push banks away from digital asset clients, without formal bans. Regulators, however, deny any coordinated effort, saying banks acted independently based on anti-money-laundering rules and safety concerns.
The issue flared up again in December when JPMorgan Chase CEO Jamie Dimon rejected claims that the bank engages in politically motivated debanking. Dimon emphasized that the bank acts only under legal and regulatory requirements—a stance shared by other big banks facing similar accusations.
Recent reviews by regulators have found that all nine of the largest U.S. national banks imposed improper restrictions on lawful businesses, including crypto firms, between 2020 and 2023. Comptroller of the Currency Jonathan Gould called these practices widespread and an improper use of national bank charters.
The review stems from a 2020 executive order under President Trump, directing agencies to ensure fair access to banking service.
