Axios Explains: Debanking and tech founders
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Illustration: Annelise Capossela/Axios
Investor Marc Andreessen set off a firestorm this past week when he said dozens of tech executives were quietly "debanked" during the Biden administration, highlighting an obscure but politically fraught practice.
Why it matters: Having your access to the banking system revoked is a significant but not necessarily unusual penalty — one that nonetheless has aggravated a conservative base prone to suspicion of government overreach.
Catch up quick: Andreessen appeared on Joe Rogan's podcast last Tuesday and said roughly 30 founders of crypto and other companies had been quietly debanked — an umbrella term usually denoting someone having their accounts closed, or ability to create new accounts blocked.
- Andreessen called it "Operation Choke Point 2.0," and claimed it was a campaign against "their political enemies and then to their disfavored tech startups."
The original Operation Choke Point was an Obama-era program targeting the bank accounts of those engaged in consumer fraud, though it became a lightning rod for conservative outrage.
- Andreessen claimed those debanked founders had no choice but to hold all their money in cash, or keep applying to different banks until they found one that would take their business.
Zoom out: Andreessen didn't provide evidence for his claim, and it's not clear what actually happened to whom, or when.
- Elon Musk amplified the claim on X.
- Coinbase founder Brian Armstrong in turn amplified Musk: "Can confirm this is true." Coinbase previously sued the FDIC for allegedly debanking crypto companies.
Zoom in: The idea of debanking isn't new or unusual.
- Aside from Operation Choke Point, there are many other examples of banks not working with — or being encouraged not to work with — certain kinds of risky clients or businesses.
- It has caused controversy in particular not just in the U.S. but also the UK and Australia.
The crypto industry, in particular, has long felt the government was using bank regulatory power to target it.
- Earlier this month, Coinbase released a trove of documents it said pointed to a concerted effort by the administration to crack down on banks working with crypto companies.
The intrigue: In the waning days of the first Trump administration, the Office of the Comptroller of the Currency advanced a rule that would have prevented banks from denying access to broad classes of people.
- Just after Biden took office, the OCC suspended that Fair Access Rule from moving forward.
The bottom line: It's not clear exactly who lost what services when or why. But the claim alone will likely sustain a controversy and possibly spur investigations after the second Trump presidency begins on Jan. 20.
