The recent decision by the Small Business Administration (SBA) may put an end to the practice of illegal debanking affecting many lawful businesses and individuals.
Issues of Debanking in the US
For years, many lawful businesses and individuals have faced sudden closures of their bank accounts without explanation. This practice was particularly prevalent during Operation Chokepoint 2.0, when banks, under pressure from federal agencies, denied financing to companies in the cryptocurrency sector and other organizations.
Trump's Executive Order
The recent executive order from President Trump responded to the numerous issues regarding debanking. SBA Administrator Kelly Loeffler condemned the use of banks as a tool for political repression and demanded compliance with new requirements. Banks must restore access to financial services for customers who were victims of unwarranted debanking.
Market Response
Caitlin Long, founder of Custodia Bank, welcomed the news but warned against premature conclusions. She pointed out that only time will tell if previously debanked companies will succeed in getting their accounts reinstated and whether fairness will be achieved in the banking system.
The SBA's decision opens new avenues for lawful businesses harmed by debanking. It is expected that in the coming months, banks will actively restore clients' rights and eliminate legal barriers.
