Congress Pushes 5 Urgent Banking Reforms to Stop Debanking

House Financial Services Committee Chairman French Hill, along with Representatives Dan Meuser, Andy Barr, and Bryan Steil, have urged the Federal Deposit Insurance Corporation (FDIC) to implement clearer regulations on digital assets. In a letter addressed to FDIC Acting Chairman Travis Hill, the lawmakers expressed concerns over reports that federal regulators have pressured banks to deny services to cryptocurrency-related businesses, a practice known as “debanking.”

Emphasizing transparency and accountability in financial oversight, they warned of potential future misuse of regulatory authority, stating:

We are concerned that if we do not make the necessary changes, future Administrations will continue to operate under the Choke Point playbook using the supervisory process to debank disfavored industries.

The lawmakers proposed five key recommendations for the FDIC. First, they urged the agency to require all banking supervisory guidance to be written and made public, preventing the use of informal verbal-only directives. Second, they called for financial institutions to provide a clear rationale when closing customer accounts, ensuring greater accountability while adhering to the Bank Secrecy Act.

Third, they pushed for the elimination of “reputational risk” as a regulatory factor, arguing that it has been misused to justify unfair banking restrictions. Fourth, they recommended an external review process for all supervisory guidance to weigh regulatory benefits against the impact on financial access. Finally, they emphasized that all regulations should be applied uniformly across financial institutions to prevent selective enforcement.

The legislators acknowledged that some of these reforms might require congressional approval but urged the FDIC to take action where possible. They wrote:

While we understand that there is still a need for Congressional action to help clarify regulations surrounding digital assets, we hope that you will look at these recommendations and implement them appropriately.

They also requested clarification on which recommendations would require legislative intervention, noting: “Please let us know which recommendations you believe require an act of Congress to help better inform our legislative efforts.” The letter reflects growing concerns in Congress about ensuring fair banking access for digital asset firms and preventing regulatory overreach against specific industries.

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