Most bank account closures in the United States aren’t simply the result of banks making independent business decisions. Instead, they are often driven by pressure from government agencies, according to a new report from the Cato Institute.
The report, written by Cato analyst Nicholas Anthony, challenges the popular belief that debanking is mainly caused by political or religious bias within financial institutions. While those cases do exist, Anthony says the evidence shows government involvement plays a much larger role.
What the report found
The study identifies three main types of debanking in the U.S.:
Political or religious debanking, where accounts are closed because of a person’s beliefs or affiliations
Operational debanking, where banks exit relationships for business or risk-management reasons
Government debanking, which happens when regulators or other authorities pressure banks to cut off certain customers
According to Anthony, government debanking is the most common of the three. Public records show repeated cases where officials have stepped in—sometimes openly, sometimes behind the scenes—to influence who banks can and cannot serve.
Why crypto firms are hit hardest
Crypto companies appear frequently in the report. For years, many digital asset firms have struggled to access basic banking services, leading to speculation that regulators are trying to slow the industry without imposing outright bans.
Anthony argues this isn’t accidental. In many cases, regulators make certain clients appear too risky for banks by tightening rules or issuing vague warnings. Faced with uncertainty, banks often choose to close accounts rather than risk regulatory trouble.
In some instances, the pressure is direct, such as letters or court orders instructing banks to terminate relationships. In others, it’s indirect—through regulations that quietly discourage banks from working with certain industries.
The report points to actions by the Federal Deposit Insurance Corporation (FDIC), which sent letters urging banks to pause crypto-related activities without offering clear guidance or timelines. According to Anthony, this effectively pushed banks to drop crypto clients altogether.
A growing public debate
Debanking has become more visible in recent months due to high-profile disputes involving major financial institutions.
JPMorgan Chase CEO Jamie Dimon said in December that the bank does not close accounts based on political or religious views, though he acknowledged that pressure from both Democrats and Republicans has influenced banking decisions.
Around the same time, Jack Mallers, CEO of Strike, said JPMorgan closed his personal accounts without explanation. Executives at ShapeShift have made similar claims.
Anthony notes that some steps taken during the Trump administration and leadership changes at agencies like the Securities and Exchange Commission have helped ease concerns. Still, he argues these measures don’t go far enough.
What could fix the problem
According to the report, lasting reform will require action from Congress. Anthony calls for changes to the Bank Secrecy Act, an end to so-called “reputational risk” regulation, and greater transparency around government influence on banks.
if Congress wants to reduce debanking,” Anthony said, “it must remove the tools that allow government agencies to quietly steer banks’ decisions.
