Newsletter: The problem with debanking
Editor’s note: This post originally appeared in our web3 newsletter — a guide to trending topics in crypto with insights and resources from engineers, researchers, and others on the a16z crypto team. Subscribe to see it in your inbox every other week.
Debanking: What you need to know
a16z cofounder Marc Andreessen’s recent appearance on the Joe Rogan podcast shined a light on the issue of debanking, and prompted many policymakers and entrepreneurs — particularly within the crypto industry — to come forward and share their stories.
Debanking is when a law-abiding person or entity unexpectedly loses their banking relationship, without any apparent investigation, detailed explanation, or even advance notice. Most importantly, there is no meaningful due process or recourse.
Not every bank account closure is “debanking.” Banks can justifiably close their clients’ bank accounts for many reasons. For example, if they believe those clients are engaged in suspicious activity; or if they proactively choose to reduce their regulatory compliance costs and efforts by limiting their exposure to certain individuals, industries, or business models.
But regulatory authorities can also unlawfully wield their power, exerting undue influence on banks to drop clients in certain industries, or those with political affiliations or interests they don’t like. Debanking has many unintended consequences — even when its goals are to protect consumers, the results often limit consumer choice and impede innovation.
How does this all work, who else is involved, and why does it matter?
A breaking update, explained: The inner workings of Operation Choke Point — and other related or subsequent systematic efforts to debank specific entities or industries — have been unclear. Investigations (if any were conducted) were conducted behind closed doors, and FOIA requests are still pending. We do know some agencies have been cited to be involved.
But, on December 6, a court filing in one such FOIA case revealed that the Federal Deposit Insurance Corporation (FDIC) instructed at least one bank (in a letter dated March 11, 2022) to “pause all crypto asset-related activity.” See the post for more, including this latest news.
A few of the things we’re excited about in crypto (2025)
A new year, a new opportunity to consider what’s next. In our third annual Big Ideas list, team members dig into the technological trends that underpin the crypto computing movement. The result is a collection of insights about what we’re looking forward to for the industry in 2025.
Ideas include: an increasing number of crypto x AI crossovers, such as a proliferation of autonomous wallet-toting bots; more tokenization of assets, like countries putting government bonds onchain; and a renewed focus on user experience, which would make the next wave of crypto applications more broadly accessible.
Read the full list of ideas for 2025
More news and updates…
Easier ways to get onchain: Coinbase has integrated Apple Pay into Coinbase Onramp, a product that enables apps to support crypto transactions, giving people more seamless access to crypto. Meanwhile, Rich Wurster, president of Charles Schwab, the U.S. financial services firm, has been touting the company’s plans to enter the crypto spot market, where he says it would like to compete with existing players on fees and commissions.
Government news: President-elect Trump announced that he will nominate former U.S. Securities and Exchange Commissioner Paul Atkins as the next chair of the SEC to replace Gary Gensler. On Thursday, he also announced that David Sacks, general partner at Craft Ventures and early COO of PayPal, would take the newly created role of crypto and AI czar.
New paper alert: Harvard economics professor Ken Rogoff and coauthors released a new NBER working paper studying “whether issuers are incentivized to make loyalty tokens tradable, raising regulation issues for monetary and banking authorities.” The upshot? In their model, “an issuer earns more revenue by making tokens non-tradable even though consumers would pay a higher price for tradable tokens.” Read the paper here.
New talks, from SNARK security to AI poetry
Research seminars: For the past three years, Tim Roughgarden, our head of research and professor of computer science at Columbia University, has hosted academics and practitioners from the crypto world and beyond to present their research. Our guests cover core topics like zero knowledge as well as brand-new research on everything from SNARK security to proposer-builder separation. We’ve released the last batch of recorded talks from this past summer. You can watch them here.
And more from the archives: Summer research seminars ‘23, academic year ‘22-’23, summer research seminars ‘22
Art x code: Artists Micah Johnson (creator of Aku World, and ex-MLB player) and Sasha Stiles (language artist, AI researcher) share their journeys exploring new worlds and media through art at our recent Founders Summit. See their talks and more from the event here.
Year in review: What happened in crypto in 2024? a16z crypto data analyst Daren Matsuoka steps through this year’s State of Crypto report. Plus, a16z crypto CTO Eddy Lazzarin joins him for a Q&A with crypto founders.
— a16z crypto editorial, research, and regulatory teams
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