The government is the mastermind behind the scenes: Think tank research uncovers the truth about the crypto industry's bank service cutoffs

The long-standing “de-banking” issue faced by the U.S. cryptocurrency industry finally has a clearer explanation. The latest research report from the Cato Institute directly points to government intervention as the true driver behind the closure of bank accounts, rather than banks’ commercial decisions. This finding breaks the common misconception and provides an institutional root cause for the industry’s longstanding difficulties.

Government Intervention Is the Fundamental Cause

Research Core Findings

Cato Institute analyst Nicholas Anthony, through a systematic review of publicly available cases, found that the reasons for bank account closures are usually categorized into three types: discrimination based on religious or political beliefs, banks’ own commercial considerations, and government factors. However, the research shows that government intervention is the primary variable in most account terminations.

This means that many actions interpreted by the public as banks actively “de-risking” are actually passive responses under policy pressure. Banks are not proactively refusing crypto clients but are compelled to follow implicit or explicit government directives.

Two Intervention Paths

Anthony cites the example of the Federal Deposit Insurance Corporation (FDIC) sending letters to financial institutions requesting a suspension of crypto-related activities, noting that such notices effectively function as termination orders but lack clear deadlines and follow-up details, resulting in de facto permanent restrictions.

Institutional Roots of the Industry’s Long-Term Dilemma

Why is this problem so widespread?

Frequent account closures or service restrictions faced by crypto companies are not accidental but systemic issues. Previously, the U.S. government maintained a cautious or even suppressive stance toward digital assets, and this policy tendency has been translated into actual bank actions through regulatory pressure.

Although bank executives publicly deny that account closures are based on political or ideological reasons, numerous public accusations from crypto practitioners continue to spark controversy. Now, with academic research backing, the institutional root of this problem becomes clearer.

Changes in Policy Environment

The Trump administration responded to the “de-banking” phenomenon through executive orders and promoted more regulatory personnel supportive of cryptocurrencies. This indicates a shift in government attitude, but Anthony believes it is not enough.

The Key to Reform Is in Congress

Why are executive orders insufficient?

Relying solely on executive measures cannot fundamentally solve the problem. The real key lies in congressional reform of the institutional framework, to weaken the tools the government uses to pressure banks through the financial compliance system from the source.

Necessary Reforms

Anthony calls for Congress to revisit the Bank Secrecy Act, with specific recommendations including:

• Abolishing regulatory logic related to “reputational risk”
• Weakening the government’s tools to pressure banks via compliance frameworks
• Reducing the likelihood of businesses and individuals passively losing banking services

These reforms are viewed as critical steps toward alleviating compliance challenges in the crypto industry and improving financial accessibility.

Summary

The value of this research report lies in its systematic data analysis addressing a question that has troubled the industry for years: why do crypto companies frequently have their bank accounts closed? The answer is government intervention, not market forces.

While current policy environments are indeed improving, true breakthroughs require legislative action. If Congress can push for reforms to the Bank Secrecy Act and weaken the government’s covert pressure tools, the fundamental issue of financial service accessibility for the crypto industry can be resolved. This is not only vital for the survival of crypto enterprises but also concerns the transparency and fairness of the financial system.