How Debanking is Accelerating Digital Asset Adoption

High-leverage crypto trader James Wynn reported last week that his accounts have been frozen by a UK bank without any explanation. 

Wynn is known for his high-leverage crypto bets on decentralized exchange (DEX) Hyperliquid. He famously made a fortune by trading meme coins before experiencing massive liquidations that wiped it all out. 

In July, Wynn lost almost the entirety of his estimated $100 million portfolio.

He claims that this hostile move by his bank came despite having paid ‘millions’ in taxes from these very accounts and claims to have not engaged in any illicit activities. The only thing that banking officials told him was that the instructions came “from higher up” and that they would be in touch.

The claims have prompted discussions on debanking and crypto still being targeted by banks despite the sector’s significant growth these past few years and the regulatory progress made during this time.

Debanking isn’t anything new or limited to crypto, either. It has long been going on, punishing individuals and corporations alike, who rely on banks for storing funds, earning interest, borrowing capital, and making payments.

What Is Debanking (Bank Account Closures Explained)

Existing since the 14th century, banks are a financial institution that offers a safe place to store money. They also act as intermediaries, using the deposits from the public to provide loans for personal and business needs.

Other services offered by banks include transfers, payments, investment options, and overall financial stability. 

Banks are regulated by laws and play a key role in the overall flow of money within an economy by facilitating financial transactions and managing the money supply.  

When a bank closes a customer’s account and denies access to essential banking services, it is called debanking. 

Also known as de-risking within the banking industry, debanking can happen for a number of reasons. 

For starters, a bank may end its relationship with a customer if it believes the customer is engaging in or facilitating illegal activities. As part of a highly regulated industry, banks must follow anti-money laundering (AML) and know your customer (KYC) laws. These laws require banks to verify customer identities, assess their risk profiles, and monitor suspicious transactions to safeguard against financial crime. 

Beyond risk management, a bank may also close its customer accounts due to reputational concerns. If it fears that association with not just a particular customer but also an entire industry could damage its reputation, it may sever its ties. This so-called ‘reputational risk,’ however, can be pretty ambiguous from a practical perspective, with some customers being debanked for arbitrary reasons.

To put it succinctly, a bank can close an account it perceives as posing a legal, financial, or reputational risk.

This practice effectively cuts people and organizations off from critical banking services, potentially pushing them out of the conventional financial system. Not only can it severely disrupt daily operations, but it can also damage the affected party’s reputation.

Losing access to a bank account can therefore be extremely disruptive for both individuals and businesses, as it prevents participation in many essential activities of modern society.

And that’s not all. In many cases, customers are not given a clear justification for why their accounts were closed. Banks are often not required to provide any notice or explanation when restricting or terminating an account.

The affected party has no clear appeal process or any legal recourse when subjected to debanking. 

This causes grave concerns about the lack of transparency and potential skewed and hidden motivations behind the closures. 

While it may feel that debanking may not be that widespread, it can be seen happening quite commonly. According to data from the UK’s Financial Conduct Authority (FCA), banks closed more than 1,000 accounts every business day during the fiscal year 2021-2022. 

Debanking can happen to just about anyone, though high-net-worth individuals (HNWI) and certain industries face a higher risk of account closure.

For instance, most prominent examples of debanking include the closing of bank accounts of sex workers, those involved with crypto, and people considered to be politically exposed persons (PEPs).

PEPs are people in prominent public positions such as heads of state, ministers, ambassadors, bank board members, high-ranking members of the judiciary, and other powerful individuals whose positions put them at a higher risk of corruption.

Besides being involved in crypto, gambling, and adult entertainment, which are deemed high-risk industries, the geographical location of a customer may also lead a bank to cut ties. Mitigating regulatory penalties or potential financial losses isn’t the only reason, though; some closures have also been linked to customers’ political or ideological beliefs.

Debanking in Practice: Recent Cases and Data

Debanking incidents have been reported across the world for a variety of reasons. Let’s now take a look at some of the most prominent examples.

Canada

In 2022, Canadian authorities froze at least 76 accounts totaling CAD $3.2 million tied to the trucker protests under the Emergencies Act. In January 2024, the Federal Court ruled the government’s invocation of the Act unlawful and unconstitutional, a decision now under appeal.

United Kingdom

In the United Kingdom, politician and broadcaster Nigel Farage experienced a similar experience in 2023 when the Coutts bank removed him as a client. 

This made the UK government launch an investigation into debanking practices within the nation’s banking industry. Around that time, the Financial Conduct Authority (FCA) reported that banks in the UK closed more than 343,000 accounts in 2022, which was over seven times more than in 2017.

Later in 2023, the FCA announced that it had found no evidence of banks closing accounts for political reasons. Instead, it concluded that the accounts under review were closed due to how individuals behaved towards bank staff, which Farage called ‘farcical’.

United States

Meanwhile, in the United States, it was the cannabis industry that had to experience a significant roadblock when it came to banking services. 

Despite progress in legalization at the state level, the industry continues to face restrictions due to the stigma attached to Cannabis. Many legally operating dispensaries in states that legalized recreational Cannabis have had their bank accounts closed, as financial institutions face pressure and potential penalties from federal regulators, since Cannabis remains illegal under federal law.

In 2021, VISA (V -3.28%) reiterated that using its payment channels to facilitate cashless Cannabis transactions is against the company’s rules and violates the regulatory prohibitions set in line with the Controlled Substances Act. In 2023, Mastercard (MA -3.3%), too, joined the chorus and released a statement prohibiting all cannabis transactions through its channel.

In crypto’s case, the industry has been at odds with the banking sector for a long time. After the 2017 bull run, many banks, including Bank of America (BAC -2.63%) and JPMorgan Chase (JPM -3.02%), prohibited their customers from purchasing crypto with credit cards.

More recently, during his appearance on Joe Rogan’s podcast, a16z co-founder Marc Andreessen shared that dozens of tech executives were quietly “debanked” in what he called an ‘Operation Choke Point 2.0.‘ 

The original Operation Choke Point was an initiative led by the Department of Justice (DOJ) between 2013 and 2017, where the agency targeted businesses it deemed high-risk. It didn’t just target criminals but a wide variety of services like payday loans, pawn shops, fireworks sales, escort services, dating services, and much more.

Andreessen claimed that its second version was a campaign against “political enemies and… disfavored tech startups.” This left founders with no choice but to hold all their money in cash or keep on applying to different banks until someone took their business, he said.

Tesla (TSLA -2.76%) CEO Elon Musk and Coinbase (COIN -7.06%) CEO Brian Armstrong came in support of the claim. The crypto exchange actually sued the Federal Deposit Insurance Corp. (FDIC) over its efforts to block banks from working with crypto companies.

Australia

In another part of the world, financial services company ANZ was accused of discrimination by a crypto user before the ACT Civil and Administrative Tribunal. 

The Australia and New Zealand Banking Group Limited, commonly known as ANZ Bank, is Australia’s 2nd largest bank by assets and 4th largest bank by market cap.

In September 2020, Bitcoin [securities_crypto_price_tag symbol=”BTC” trader Allan Flynn brought a human rights action against the bank, alleging discrimination on the basis of his “profession, trade, occupation, or calling” in violation of the anti-discrimination legislation of the Australian Capital Territory.

As per Flynn’s claims, the bank closed his and his brother’s accounts due to his occupation. The institutions also contacted another bank about his Bitcoin trading, allegedly causing the others to deny him service, too.

In the settlement that was reached in Oct. 2021, the bank admitted to de-banking Flynn because he operated a Bitcoin trading service, and they believed it was necessary to mitigate exposure to regulatory risk.

At a parliamentary hearing of the Australian Senate’s Select Committee on Australia as a Technology and Financial Centre, crypto trader Michaela Juric also recounted being refused services by financial institutions, putting her business under threat. She said:

“As of yesterday, I have been debanked and banned from 91 banks and financial institutions. There’s been instances where de-banking has caused me to be denied from being able to get utilities or phone and internet services, which I think is very concerning.”

A recent survey of UK fintech and crypto firms, meanwhile, found that half of those surveyed have been outrightly rejected from opening a bank account or had their accounts closed by a major bank. A mere 14% were able to successfully apply for a bank account with one of the nine biggest mainstream banks in the country without it being closed later.

These high figures come even as UK policymakers promote the nation as the global home of fintech and crypto. As we reported above, trader Wynn marks the latest victim of banking in the UK, a country that appears to be struggling to turn its ambitions into action.

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How to Reduce Debanking Risk (Individuals & Firms)

While individuals working in the adult entertainment industry, which covers stripping, pornography, and prostitution, have long faced discrimination from financial institutions, now, crypto has also joined sex work in being systematically debanked.

Interestingly, this not only affects small companies and regular individuals but also large corporations and public figures. As the ability of banks to deny service or freeze accounts independently increasingly affects businesses, regulators have begun to take some action.

The FCA’s investigation into banks’ decision to debank people led to several proposed Treasury reforms, including banks providing clients with at least 90 days’ notice before closing accounts and explaining them in a clear way.

The biggest one, however, was taken just last month when crypto-friendly US President Donald Trump signed an executive order directing federal regulators to investigate and address instances where banks have closed accounts based on political or religious beliefs, or lawful business activities. 

The order mandates a review of financial institutions to identify and rectify such practices.

In particular, the Order aims to limit “politicized or unlawful debanking” by ensuring that certain individuals, groups, or industries are not denied access to financial services because of their constitutionally protected beliefs, affiliations, or views. Instead, it emphasizes that banking decisions must be based on “individualized, objective, and risk-based analyses.”

The order mentions political conservatives, religious groups, and extends to companies dealing in payday loans, firearms, and cryptocurrencies.

“The digital assets industry has also been the target of unfair debanking initiatives,” stated the fact sheet by the White House. “These practices erode public trust in banking institutions and regulators, harm livelihoods, freeze payrolls, and impose significant financial burdens on law-abiding Americans.”

The EO is removing “reputational risk,” which the Federal Reserve defines as the “potential that negative publicity regarding an institution’s business practices, whether true or not, will cause a decline in the customer base, costly litigation, or revenue reductions.”

This move from Trump doesn’t come as a surprise, as putting an end to ‘Operation Choke Point 2.0″ was one of the key themes of his 2024 campaign trail.

Operation Choke Point 2.0 refers to actions taken by federal regulators to restrict banks from engaging with the crypto industry. 

The “executive order is a critical step in bringing transparency and accountability to a system that has been able to lord over the digital asset industry for far too long, and I applaud his administration’s efforts to prevent further debanking of lawful industries,” said Sen. Cynthia Lummis, R- Wyo on X.

This shift to cryptocurrency advocacy among the Trump administration and family, according to Eric Trump, came after being ‘debanked’ in 2021. While speaking to the WSJ, he revealed that hundreds of their bank accounts were closed following the Capitol incident, which he called a “politically motivated” decision. 

“At that time, I realized how fragile the financial system was and how easily it could be weaponized against you,” he told the WSJ, and compared it to the regulatory pressure cryptocurrency companies had to face under the Biden administration.

Why Debanking Accelerates Digital Asset Adoption

While crypto itself faces the threat of debanking, it also offers the solution to this very problem.

Banks hold a lot of power, with the ability to cut off individuals or businesses from essential financial services, stifling their growth and participation in society. These institutions, however, are part of an outdated system, where control is in the hands of only a few, who get to decide the fate of many.

Built on the foundation of decentralization, transparency, and accessibility, cryptocurrencies challenge this imbalance. Unlike banks, crypto has no single entity in power, giving it the potential to create a more inclusive financial landscape.

This is made possible by blockchain, the technology underlying cryptocurrencies, which represents a disruptive force in the finance sector.

It is a distributed database that is shared across a computer network, providing a decentralized, transparent, and secure record of transactions. Operating on decentralized networks reduces any reliance on a third party or traditional financial institutions, which mitigates the risk of account closures.

More importantly, public blockchains are primarily permissionless and open source, which means anyone can view their code and use the services built on them. This means that crypto allows anyone, regardless of their gender, location, ethnicity, political affiliations, or socioeconomic background, to use all the different products and services.

Being permissionless and borderless, crypto actually has the power to help the 1.4 billion unbanked population gain access to financial services and attain financial freedom. 

In fact, countries like India, Pakistan, Indonesia, Nigeria, Argentina, and Mexico, which are home to some of the largest global adult populations without bank accounts, make for the highest crypto adoption.

According to Chainalysis’ 2025 Global Adoption Index, Asia-Pacific (APAC) continues to be the global hub of grassroots crypto activity, led by India, Pakistan, and Vietnam, where both centralized and decentralized services are gaining widespread adoption. Other top-ranked countries on this list include the US, Brazil, Nigeria, Indonesia, Ukraine, the Philippines, and Russia.

This trend showcases crypto’s potential as more than just a speculative asset. Digital assets are fast becoming a core infrastructure for survival in economies dealing with limited access to traditional banking services, persistent inflation, currency devaluation, and government censorship.

Crypto adoption is actually driven by unique elements of every country’s economic condition.

“Turkey’s currency volatility, for example, pushes individuals toward crypto for more stability, particularly as a cross-border transaction tool. While in India and Indonesia, adoption is driven by young, growing populations with a robust digital payment infrastructure and rising interest in decentralised finance.”

– Ritesh Dutta, Managing Director at AMINA Bank, told FT

Overall, there are more than half a billion cryptocurrency owners worldwide. And this crypto ownership is growing at a CAGR of 99%, which far surpasses the growth rate of payment methods that average at 8% from 2018 to 2023.

It is the desire to send value fast and without restrictions, while having transparency and autonomy that’s absent in legacy systems, that has 48% of Gen Z individuals owning cryptocurrency, compared to 35% of the global population. Performance expectancy, effort expectancy, social influence, and facilitating conditions are among the factors driving¹ Gen Z’s approach to crypto. 

Moreover, economic uncertainty, along with regulatory overreach and debanking incidents, is accelerating the shift towards digital assets, with Gen Z and millennials alike utilizing crypto as a hedge against systemic instability. 

Final Thoughts

In today’s fast-paced digital economy, where censorship is on the rise and financial freedom is on the decline, crypto offers the perfect solution to take charge and break the chains of the centuries-old system.

Banks with their centralized structure hold all the power to debank individuals and businesses without offering any transparency in or justification for their decisions. The subsequent financial exclusion isn’t just an inconvenience but a systemic barrier that can cut one off from society and prevent their growth.

Cryptocurrencies, with their decentralized and verifiable architecture and open-source protocols, can be the lifeline here that can offer a viable pathway toward greater financial inclusion as well as freedom.

The ongoing rise of crypto adoption shows a response to structural flaws in legacy systems, reshaping the global financial landscape!

References:

1. Gupta, D., Garg, K., Goel, V., Kaur, P., Kaur, B., & Gupta, T. (2024). Factors influencing the decision behaviour of Gen-Z to invest in cryptocurrency: An application of UTAUT model. Journal of Informatics Education and Research, 4(1). https://jier.org/index.php/journal/article/view/607/539