U.S. President Donald Trump has signed an executive order aimed at protecting citizens' financial rights from discrimination by banks. The order responds to criticism over the practice of 'debanking,' associated with denying service based on political and religious beliefs.
Contents of the New Order
The order signed by Trump aims to prevent banks from denying services based on political or religious beliefs. The document highlights that the digital assets industry has become a victim of unfair banking practices. It removes 'reputational risk' as a legitimate reason for increased regulatory scrutiny. A key point is the requirement for federal regulators, including the Federal Reserve, to stop using reputational risk in supervision within 180 days.
Reactions to the Order
The order received support from some Republican lawmakers who believe targeting individuals based on their political beliefs should not occur in the financial system. Senator Cynthia Lummis pointed out that now millions of Americans will be able to include digital assets in their retirement plans thanks to the president's actions.
Impact on Financial Institutions
Banks assert they do not reject customers based on beliefs, but point to confusion caused by inconsistent regulatory guidance. Major banks emphasize it is in their best interest to take deposits and support as many customers as possible, but regulatory overreach creates hurdles. Trump's order may reshape access to banking services not only within the crypto sector but also for a broad range of clients.
Trump's signed order can significantly impact banking practices and ensure protection against discrimination for citizens, particularly in the digital assets space. This decision underscores the importance of fairness and accessibility of financial services for all Americans.
