The crypto industry’s inability to access banking services still concerns many industry observers despite recent policy victories.
In past years, financial services firms and banks concerned about fiduciary risk, reporting liabilities and reputational risk often would refuse to offer service to crypto firms — i.e., “debanking” them.
Legislative efforts in the United States and Australia are attempting to remove these barriers for the crypto industry. In the former, legislators repealed guidelines that made it difficult for banks to custody crypto assets, as well as those stating that crypto carried “reputational risk” for banks. In the latter, the Labor Party has introduced a bill to create a legal framework for crypto, giving banks the clarity they need to interact with the crypto industry.
Despite these tangible efforts, some crypto industry observers say that the crypto’s debanking problem is far from over.
US crypto execs say debanking is still an issue
The crypto industry has long decried “Operation Chokepoint 2.0,” its nickname for a suite of policies that they claim constrained the crypto industry from growing under the administration of former President Joe Biden. Among these were measures making it more difficult for crypto firms to access banking services.
The early days of the second administration of President Donald Trump have seen many of these repealed or changed. One of the first was the repeal of Staff Accounting Bulletin 121, which required banks offering custody for customers’ cryptocurrencies to list them as liabilities on their balance sheets — this made it very difficult for banks to justify offering such services.
The administration also appointed a new head of the Office of the Comptroller of the Currency (OCC), Rodney Hood. Dennis Porter, CEO of the Bitcoin-focused policy organization Satoshi Action, told Cointelegraph that under Hood’s tenure, the OCC has already said banks can offer crypto-related services like custody, stablecoin reserves and blockchain participation.
“This opens the door for broader adoption of digital asset technology and custodial services by traditional financial institutions, signaling a major shift in how banks engage with crypto,” he said.
Despite these victories, Caitlin Long, founder and CEO of Custodia Bank, said on March 21 that debanking is likely to remain a problem for crypto firms into 2026.
Long said the non-partisan board of governors of the Federal Reserve is “still controlled by Democrats,” alluding to Democrats’ more skeptical stance on crypto. Long claimed that “there are two crypto-friendly banks under examination by the Fed right now, and an army of examiners was sent into these banks, including the examiners from Washington, a literal army just smothering the banks.”
Long noted that Trump won’t be able to appoint a new Fed governor until January, meaning that, while other agencies may be more crypto-friendly, there are still roadblocks.
Australia’s Labor Party to create crypto framework
Stand With Crypto, the “grassroots” crypto advocacy organization started by Coinbase that has spread to the US, UK, Canada and Australia, said that “in Australia, debanking is quietly shutting out innovators and entrepreneurs — particularly in the crypto and blockchain space.”
In a post on X, the organization claimed that debanking results in “reputational damage, loss of revenue, increased operational costs, and inability to launch or sustain services.” It also claimed that it forces some companies to move offshore.
In response to these concerns, the ruling center-left Labor Party in Australia has proposed a new set of laws for the cryptocurrency industry. The changes to current financial services law seek to tackle the issue of debanking in the country’s cryptocurrency industry.
Edward Carroll, head of global markets and corporate finance at MHC Digital Group — an Australian crypto platform — told Cointelegraph that in Australia, debanking decisions were “not the result of regulatory directives.”
“Rather, they appear to stem from a more general sense of risk aversion due to the current lack of a clear regulatory framework.”
Carroll was optimistic about the Labor Party’s proactive stance. The major political parties were “showing a shift in sentiment and a shared commitment to establishing formal crypto regulation.”
“We are hopeful that this will give banks the confidence to reengage with crypto businesses that meet compliance standards,” he said.
Canada unlikely to relieve crypto firms
In Canada, “debanking remains a serious and ongoing challenge for the Canadian crypto industry,” according to Morva Rohani, executive director of the Canadian Web3 Council.
“While some firms have successfully established relationships with banking partners, many continue to face account closures or denials with little explanation or recourse,” she told Cointelegraph.
While debanking actions aren’t explicit, financial institutions’ interpretation of Anti-Money Laundering and Know Your Customer regulations “creates a risk-averse environment where banks weigh compliance and reputational concerns against the relatively low revenue potential of crypto clients.”
The end result, per Rohani, is a systemic debanking problem for the digital assets industry.
But unlike in the US and Australia, the Canadian crypto industry may not find relief anytime soon. Prime Minister Mark Carney, whose more crypto-skeptic Liberal Party is surging in the polls ahead of the April 28 snap elections, is himself a crypto-skeptic.
Polls show Carney firmly in the lead. Source: Ipsos
Carney has stated that the future of money lies more in a “central bank stablecoin,” otherwise referred to as a central bank digital currency.
Rohani said that “no comprehensive legislative solution has been implemented” with regard to debanking. “A more structured approach, including mandated disclosure of reasons for account termination and regulatory oversight, is needed,” she said.
Critics claim crypto is “hijacking” the debanking issue
There is another side to the debanking debate, which claims that crypto’s debanking “problem” is a non-issue or a vehicle for crypto firms to get what they want in terms of regulation.
Molly White, the author of Web3 Is Going Just Great and the “Citation Needed” newsletter, has noted that, in the US at least, crypto firms have claimed to be victims of debanking while lauding Trump’s efforts to end protections for debanking at the same time.
In a Feb. 14 post, White stated that the crypto industry had “hijacked” the discussion around debanking, which contains legitimate concerns regarding access to financial services — particularly regarding discrimination due to race, religious identity or industry affiliation.
She claims the crypto industry has used debanking as a means to deflect legitimate regulatory inquiries into crypto companies’ compliance efforts.
Further of note is the fact that Coinbase CEO Brian Armstrong has applauded the efforts of the Department of Government Efficiency (DOGE), with Elon Musk at the helm, to dismantle the Consumer Financial Protection Bureau (CFPB).
One of the CFPB’s responsibilities is to investigate claims of debanking. But when DOGE instructed the agency to halt all work, Armstrong said it was “100% the right call,” in addition to making dubious claims about the agency’s constitutionality.
In the meantime
Whether the industry’s debanking concerns stem from legitimate discrimination or an attempt at regulatory capture, crypto firms are developing solutions in the interim.
Porter said that, as an alternative to banking services, “many crypto companies have leaned on stablecoins as a primary tool for managing finances,” while others have worked with “smaller regional banks or specialized trust companies open to digital assets.”
Rohani said that this kind of “patchwork of relationships” can increase operational costs and risks and are “not sustainable long-term solutions for growth or to build a competitive, regulated industry.”
Porter concluded that the banking workarounds could actually strengthen the industry’s position, stating that they may “continue evolving into fully integrated relationships with traditional financial institutions, further cementing crypto’s place in mainstream finance.”
The Conservatives have urged Sir Keir Starmer to publish all concerns raised by the security services about the appointment of sacked US ambassador Peter Mandelson.
Shadow cabinet office minister Alex Burghart said his party would push for a vote in parliament demanding the government reveal what issues the security services had in relation to Lord Mandelson’s relationship with the disgraced sex offender and financier Jeffrey Epstein.
Mr Burghart said material from the security services is not usually made public, but that a substantial amount of information was already in the public domain.
He told Sky News Breakfast: “What we’re going to do is we’re going to try and bring a vote in parliament to say that the government has to publish this information.
“It will then be up to Labour MPs to decide whether they want to vote to protect Peter Mandelson and the prime minister or make the information available.”
Mr Burghart said he had spoken to Labour MPs who were “incredibly unhappy about the prime minister’s handling of this”, and that it would be “very interesting to see whether they want to be on the side of transparency”.
Tory leader Kemi Badenoch said she believed Lord Mandelson’s appointment revealed that the prime minister “has very bad judgment”.
“It looks like he went against advice, security advice and made this appointment…and what we’re asking for is transparency.”
The Liberal Democrats have also called for parliament to be given a role in vetting the next US ambassador.
“I think it will be right for experts in foreign affairs on the relevant select committee to quiz any proposal that comes from 10 Downing Street, and so we can have that extra bit of scrutiny,” the party’s leader Ed Davey told broadcasters.
The former UK ambassador to France, Lord Ricketts, said the government should not be “rushing into an appointment” to replace Lord Mandelson.
“I would urge the government to take their time, and I would also make a strong case to the government to go for a career diplomat to steady the ship after this very disruptive process,” he said.
Labour MP Chris Hinchcliff posted on X that the former US ambassador should also be removed from the House of Lords.
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Nigel Farage said Sir Keir’s decision to appoint Lord Mandelson as UK ambassador to the US was a “serious misjudgement” by the PM.
“We don’t yet know what the intelligence briefings would have said, but it looks as though Morgan McSweeney, the prime minister’s right-hand man, and the prime minister, ignored the warnings, carried on,” he said.
“He was then reluctant to get rid of Mandelson, and he’s now left himself in a very vulnerable position with the rest of the parliamentary Labour Party.
“It is about the prime minister’s judgement, but it is also about the role that Morgan McSweeney plays in this government.”
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2:21
Reform UK leader Nigel Farage says Keir Starmer ignored the warnings about Lord Mandelson.
The timing of the sacking comes ahead of Donald Trump’s state visit next week, with the US president facing questions over his own ties with Epstein.
The prime minister sacked Lord Mandelson on Thursday after new emails revealed the Labour grandee sent messages of support to Epstein even as he faced jail for sex offences in 2008.
In one particular message, Lord Mandelson had suggested that Epstein’s first conviction was wrongful and should be challenged, Foreign Office minister Stephen Doughty told MPs.
The Foreign Office said the emails showed “the depth and extent of Peter Mandelson’s relationship with Jeffrey Epstein is materially different from that known at the time of his appointment”.
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1:37
Mandelson exit ‘awkward’ before Trump state visit
Downing Street has defended the extensive vetting process which senior civil servants go through in order to get jobs, which has raised questions about whether or not they missed something or Number 10 ignored their advice.
The prime minister’s official spokesman also said yesterday that Number 10 “was not involved in the security vetting process”.
“This is managed at departmental level by the agency responsible, and any suggestion that Number 10 was involved is untrue,” he told reporters.
Asked repeatedly if any concerns were flagged to Downing Street by the agencies that conducted the vetting of Lord Mandelson, he did not dismiss the assertion, repeating that Number 10 did not conduct the vetting.
Speaking to Sky News this morning, Scotland Secretary Douglas Alexander said his reaction to the publication of the emails was one of “incredulity and revulsion”.
He said he was “not here to defend” Lord Mandelson but said the prime minister “dismissed” the ambassador when he became aware of them.
The cabinet minister said Lord Mandelson was appointed on “judgement – a judgement that, given the depth of his experience as a former trade commissioner for the European Union, his long experience in politics and his policy and doing politics at the highest international levels, he could do a job for the United Kingdom”.
“We knew this was an unconventional presidential administration and that was the basis on which there was a judgement that we needed an unconventional ambassador,” he said.
Mr Alexander added: “If what has emerged now had been known at the time, there is no doubt he would not have been appointed.”
The question being asked everywhere today is “how did it happen”? Because the vibe out of Downing Street this morning seems to be that nobody anywhere did anything wrong, processes were followed, and everything went by the book.
But can they really, honestly, believe that?
To recap, the reason that everyone is asking is to try and discern whether the failings are a consequence of a fundamental, unfixable flaw at the heart of Keir Starmer’s operation.
Yesterday, we told you that the security services had raised red flags about the appointment of Peter Mandelson, yet Number 10 went ahead.
The story was nuanced. We did not say that Peter Mandelson had failed a deep vetting, just that concerns were relayed and the appointment went ahead.
We put the story to Downing Street, and – being candid – I did not understand what their official response meant, beyond it quite obviously not being a denial.
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As a response, Number 10 said to us that the security vetting process is all done at a department level – with no Number 10 involvement.
To a wider group of political journalists, an hour and a half after we aired the story, Number 10 said they were “not involved in the security vetting process. This is managed at the departmental level”.
Today, the line from Downing Street seems to be that there was no official level block on the appointment, so it went ahead.
Although The Times has reports from allies of Lord Mandelson claiming he disclosed everything, the exact chain of events remains opaque.
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1:54
The messages inside Epstein ‘birthday book’
But for those who want to understand the inner workings of government, here is more detail about the two types of check that would have gone on, and what this tells us.
Firstly, by the security services.
The Cabinet Office led both on vetting and separately on propriety and ethics (a form of government HR) but in effect, it’s multi-agency and multi-department.
In this instance, potentially multiple agencies would likely feed into the Foreign Office, or FCDO.
FCDO then act as a liaison for vetting – what I’m told is known as a “front face” – and an FCDO official takes a note to tie everything together.
We are being told that this amounts to a binary decision.
So, potentially, an FCDO official ties up the findings from both agencies and departments in one place and that’s given to the Permanent Under Secretary at the department (Philip Barton, later Olly Robbins) and Number 10.
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5:54
‘Was PM aware of Mandelson’s intimate relationship with Epstein?’
So the recommendations can both be “by a Foreign Office official” and from security services at the same time. That potentially explains some reporting this morning.
I believe, ultimately, I was told about the security service red flags because they do not want to share the blame for a catastrophic intelligence miss that has harmed this government severely.
And is a situation like this ever binary? If there are matters of judgement for the PM to weigh up, are we honestly saying they are kept from him?
Sources tell me there are always conversations around the side of these processes: it would be recklessly incurious of Number 10 if this had not been the case for someone who already resigned twice and whose association with Jeffrey Epstein was in the public domain.
But then there is a second, Cabinet Office-led process which is arguably more important.
There will have been checks on Lord Mandelson by examining what’s in the public domain.
It is, quite simply as one person said to me, a “Google check”.
This, too, must have flagged stories about Lord Mandelson’s relationship with Epstein post-conviction, and gone to Number 10.
At this point, the question is why No 10 did not see the sheer enormity of the risk this posed and pressed ahead anyway.
Who thought this was okay, and why?
There is a witch-hunt vibe to the Parliamentary Labour Party right now.
Now – and forever – there will be footage of Sir Keir Starmer in the Commons chamber defending keeping an ally in place who admitted a close relationship with a known paedophile after conviction and a jail sentence, before sacking him the next day.
The previous week, he was defending another ally who had avoided tax, before sacking her two days later.
When emails emerged of exchanges between the two men showing Lord Mandelson remaining supportive of Epstein even afterhe was convicted for the sex trafficking of underage girls, it was clear he had to go.
Lord Mandelson tried to cling on. The PM summarily relieved him of his duties.
There had initially been an appetite to keep him, in order to avoid embarrassing Donald Trump, who himself is being asked questions about his association with Epstein – and hates it.
But when these emails emerged, it was clear to No 10 that the scandal would blow up the state visit and Mandelson had to go.
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But what was also true was that even attempting to keep him in these circumstances could blow up Sir Keir Starmer.
The parliamentary party – and particularly many of the women MPs – were absolutely furious that Mandelson had backed a convicted paedophile against women and girls who had, to quote one victim, been passed to men by Epstein like fruit trays.
The spectre of a powerful man like Mandelson trying to protect him and even the thought of the PM trying to row in behind was absolutely unconscionable.
As Harriet Harman said on our Electoral Dysfunction podcast before he was sacked: “These young women talked about the ruination of their lives by this man abusing his wealth and his power.
“And the idea that Peter Mandelson sided with Epstein in that situation – and this is always the question – whose side are you on?
“You’ve got to be on the side of the vulnerable and not against the person who commits criminal offences, abusing their power.”
Harman also said she thought the prime minister would have been in “anguish” over having to defend Mandelson in the Commons.
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2:59
Harriet Harman, Ruth Davidson, and Beth Rigby react to the news
He looked almost as green as the green benches on Wednesday as he insisted he had full confidence in his ambassador, despite warnings from Mandelson himself that more embarrassing material was about to emerge.
When that material did emerge, I understand that the PM spent the evening in Downing Street going through the material and then summoned his new Foreign Secretary Yvette Cooper, who has been a tireless champion in the fight to end violence against women and girls, for a meeting in which they decided to sack Mandelson.
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1:37
Sky’s US Correspondent Mark Stone provides analysis on the impact this may have on UK-US relations, as the President’s state visit to the UK approaches
That the US ambassador didn’t go of his own accord has angered many MPs and probably the PM, who has a record of prosecuting child sex offenders and made halving violence against women and girls a priority for this government.
Now Mandelson has gone. But, with the end of that comes new questions.
Questions about Keir Starmer’s political judgement.
This is not the first time Lord Mandelson has resigned in disgrace.
He stepped down as trade secretary over a loan from a colleague he failed to register under Tony Blair, and then quit again as Northern Ireland secretary over a cash for passports scandal.
And now the question is, in light of the Epstein connection, why did Starmer let him back in?
There is talk around Westminster that his key advisers had backed the move and Starmer had some reservations.
As well he might, because in the end, the scandal of it all stops at the PM’s door.
There are questions as to whether No 10 ignored concerns raised by the appointment and Badenoch is asking for full transparency.
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3:11
No 10 went ahead with the appointment anyway, Sky News understands
It is not known whether all of the detail was shared with the prime minister personally.
The prime minister’s official spokesman said No 10 “was not involved in the security vetting process”.
Badenoch said the latest revelations “point yet again to the terrible judgement of Keir Starmer”.
She added that it is “imperative that all documents relating to Peter Mandelson’s appointment are released immediately”.
Then there is a bigger picture.
Two weeks into a supposed reset, two scandals and two key figures gone from government.
This was a PM who promised to do politics differently and clean up after the scandal-ridden Tory years.
Peter Mandelson’s return to government and ousting in this manner casts a long shadow over the PM and that promise, and raises serious questions about the PM’s political judgement.
It was only on Wednesday that No 10 was thinking about trying to keep Mandelson to try to avoid putting the spotlight back onto President Trump.
With the White House, Royal Family and the UK government all tarnished by association with sex offender Jeffrey Epstein, this was an issue they all wanted to avoid and now it is top of the agenda.