The Truth About Debanking
How crypto companies and other legal businesses are being unfairly regulated by the SEC and the FDIC.
Emily Pennington // SpankChain
In late 2024, Marc Andreessen broke the crypto corners of the internet when he went on Joe Rogan’s podcast and spoke fervently about the negative impacts of debanking on his firm and the crypto industry at large.
Since The Joe Rogan Experience has over 18.6 million subscribers, it’s understandable that the story has since blown up, prompting a huge assortment of spin-off articles clambering to explain what debanking is and pick apart the truth from the hyperbole in Andreessen’s statements.
“There’s a constitutional amendment that protects free speech, but there’s no constitutional amendment saying that the government can’t debank you,” says Andreessen, going on to explain that mainstream financial institutions are often pressured by government agencies to kick legal businesses out of their checking accounts, payment platforms, and more, simply because they are classified as being “too risky.”
Of course, this isn’t exactly new news. We here at SpankChain have been speaking out against the damage that debanking can have on emerging businesses for years now, actively lobbying with the Free Speech Coalition to pass comprehensive, anti-discriminatory financial reform in Congress.
Below, we’ll give you the low-down on debanking (and don’t worry; it won’t be a bunch of boring financial mumbo jumbo). We’ll explain what it is, how it might affect your investments or personal finances, and give you some insight into the road ahead.
What is debanking, anyways?
“Debanking is when you, as a person, or your company are literally kicked out of the banking system,” explains Andreessen on the Joe Rogan Experience. He goes on to say that a firm or an individual can be kicked out of a big bank for something as frivolous as publicly-stated political beliefs and makes other sweeping statements that are tougher to fact check, because Andreessen did not list specific crypto founders who have been debanked on the podcast. We’re going to tell it to you straight.
One of the big pieces of legislation that’s coming under fire right now is an Obama-era initiative dubbed Operation Choke Point, which was aimed at targeting the bank accounts of those engaged in consumer fraud. Though it may have started with good intentions, it’s currently being pointed to by startup and crypto founders as the tool that’s being wielded to shut down federally legal businesses, because they are seemingly dubbed “too risky” for reasons not often disclosed.
In recent weeks, everyone from Elon Musk to Brian Armstrong, the CEO of Coinbase, have amplified Andreessen’s woes, claiming that they, too, have been targeted in the government’s wide-reaching debanking initiatives. Coinbase has even gone so far as to file lawsuits against the Securities and Exchange Commission (SEC) and the FDIC to have classified documents released under the Freedom of Information Act that would shed light on how the SEC chooses which digital assets to regulate more forcefully.
While it’s true that a privately run financial institution can kick a company or an individual out of its network because it arbitrarily deems the business as “too risky,” it’s also true that the Federal Deposit Insurance Corporation (FDIC) routinely issues statements that offer strong guidance for which industries should be considered high risk. Following the industry-melting collapse of the FTX exchange, in late 2022, the FDIC issued a guidance memo in January of 2023 stating that “business models that have… concentrated exposures to the crypto-asset sector raise significant safety and soundness concerns.”
In other words, nearly all of crypto and the investment firms that with their hands in that pie got flagged back in 2023 as “too risky” by the FDIC.
How could this affect me or my business?
As we mentioned before, this is technically nothing new. Legacy banks have been kicking legal businesses off of their platforms for decades. In the past, these denials of financial rights flew relatively under the radar, because financial institutions were more fixated on gun manufacturers, payday loan providers, sex workers, and private prison operators. However, now that the overreach has reached crypto asset holders and the DeFi community, it’s moved into mainstream news.
So, how could this affect you, personally? If you run a legal business that’s considered “too risky” by traditional banking establishments, you could find yourself suddenly losing access to your checking account, payment platforms, or your ability to accept certain credit cards. It could, theoretically halt the finances of your entire business overnight.
Contrarily, if you work at a crypto company or an investment firm with a significant percentage of crypto-based holdings, the FDIC could, theoretically, recommend that the company’s assets are too risky for an ordinary bank, and it might be forced to shut down or move to a more risk-tolerant establishment, which would likely charge higher banking fees.
What happens next?
SpankChain is actively lobbying for legislation that states that any legal business cannot be discriminated against, unless there is specific evidence brought forward of wrongdoing or law breaking.
In fact, one of the initiatives that we’ve been pursuing through the Consumer Financial Protection Bureau (CFPB) recently passed, and there’s a new rule stating that large-scale payment platforms handling more than 50 million transactions per year (think PayPal and Venmo) need to follow federal law, just like large banks. Hopefully, this will put an end to platforms kicking individuals and small businesses off willy-nilly, without due process.
As we enter a transitional phase between two different administrations, SpankChain is also continuing to lobby for an investigation into Operation Choke Point 2.0, hoping to end outdated legislation that unfairly targets legally-run crypto businesses. The Fair Access to Banking Act was also introduced in April 2024 as an attempt to explicitly disallow banks from discriminating against companies and private citizens who are running legal businesses.
SpankChain is still very involved with the Free Speech Coalition and lobbying with the firm FS Vector to fight the financial discrimination that both sex workers and crypto investors often face.
The return of SpankPay
While that legislative chaos continues to play out on the global scale, we are also thrilled to announce the return of our infamous payment platform, SpankPay.
Originally built on the Wyre platform, which was bought and later shut down, SpankPay has always aimed to provide easy-to-use, low-cost payment solutions for adult industry workers of all stripes.
Its newest iteration will look similar to the now-defunct site WishTender, and users will be able to seamlessly list items and collect payments for those items via a perfectly legal back-end payment platform. Anyone, not just performers, will be able to sign up and use SpankPay, and the best part is that our fees will be incredibly low–less than half of what you’d get charged on OnlyFans.
So, when is this fabulous return taking place? We plan to roll out in mid-January, right between the auspicious timing of the XBIZ Awards and the AVN Awards, so mark your calendars. In the meantime, you can login to the site right now and reserve your username before we go live.
Be sure to follow us on Twitter/X for all the latest updates as we get closer to launch day!
