New GOP bill aims to end debanking of crypto companies, ‘risky’ industries
The new GOP bill comes on the heels of congressional hearings into “Operation Chokepoint 2.0” and bipartisan agreement that debanking should end.
South Carolina Senator Tim Scott, the leader of the US Senate Banking Committee, plans to introduce a bill on March 6 to end regulatory oversight of customer reputational risks toward banks, paving the way for an end to a discriminatory practice known as “debanking,” according to a report from The Wall Street Journal.
Debanking is a practice where banks may choose not to do business with clients that pose “reputational risks.” The Federal Reserve defines reputational risk 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.”
At least 11 Republican lawmakers are reportedly co-sponsoring Scott’s bill, while various banking industry groups are planning to endorse it, The Wall Street Journal said. These groups include the Bank Policy Institute, which labels itself as a nonpartisan group that represents the nation’s leading banks. JPMorgan Chase, the largest bank in the United States, said it is also in support of the bill.
