I'm not sure I got the gist of it right, but not willing to go a second time.
This was specifically about banks and their regulation, and I think it misses the more vague and less accurate sense that financial institutions can remove players and customers from the market basically at will, which would be the reason given by people going to crypto IMHO.
To his point it doesn't fit "debanking", but if tomorrow VISA and Mastercard decide your online business is stinky, holding a bank account won't help you in any useful way.
That's basically what happened with Porn, where even if you had a very tightly managed and stricly lawful business (let's say you produce clay stop motion porn movies), you'd still be kicked off payment platforms.
Sure there can also be interesting discussions about actual bank account closures, but I think it's a lot more of a minority, there's better recourses, and most decent countries will be willing to guarantee citizens can get some form of banking whatever their situation.
> Sure there can also be interesting discussions about actual bank account closures, but I think it's a lot more of a minority, there's better recourses, and most decent countries will be willing to guarantee citizens can get some form of banking whatever their situation.
I think you're just speaking form your personal point of view as an entrepreneur. Losing access to the payment system would be the end of your career, yes. But losing the ability to hold a basic checking account would be a death sentence for most normal citizens, including you.
Think of everything that is primarily paid in checks or bank transfers. Think of all your income that you receive primarily in checks or bank transfers form.
Now think of using cash for those use cases. You'll quickly find that it's untenable and sometimes plain impossible. Cashing a personal check your grandma sent you? Forget about it. Cashing a pay check? Go to one of those cash-for-check places that keep 20% of it!
"death sentence": about 5 million households in the US do not have checking accounts. Although it's a great inconvenience, and in many cases may be an injustice, it doesn't seem incompatible with life.
Note that a "normal" checking account customer poses basically zero risk to a bank - money goes in via direct deposit, comes out via debit, ACH, and withdrawals, and the bank is never left holding the bag.
From the article: Employees of crypto companies are not "normal" bank customers. Recent history shows that there is a significant risk that they may deposit commingled funds from their employer, which (a) puts the bank at risk for huge money-laundering fines, and (b) puts it at additional risk (I think?) if the crypto company fails.
If you have a credit score of 300 and complain about not being able to get a mortgage, I won't have a lot of sympathy. If your employment history is spotty and you're not a full-time employee, I might have more sympathy but I'll still understand why it would be hard to get a loan.
It turns out that if you work for a crypto company, you're a bigger risk to the bank than someone with bad credit is to a mortgage lender, as the possible losses are far higher than the amount of money they'd ever make off of you, and the fraction of crypto companies that have gone down that route is uncomfortably high. Oh well.
BTW, Walmart charges $4 to cash checks less than $1000, and $8 for $1000-$5000. If Grandma's check is $200 or less, it will cost $6. Your local post office will sell you a money order (up to $1000) for about $3, and you can get prepaid credit cards to pay online bills at your local 7-11, again for prices in the single digits.
There's quite a lot of variance across the country of Europe.
Bank transfers are indeed common but implying that payment cards are not is a bit of a misnomer - and the (buyer) protection offered by the card networks is much higher.
I guess my point is, that even in Europe, accepting only Bank transfers is going to limit your client base fairly significantly and to a sizeable number of people will be considered a signal of how much they can trust the vendor.
You don't deserve to be down voted for your comment, because what you wrote is true. Depending on what kind of product you're selling online, you can expect about half of Europeans to pay by card and half by bank wire, if given both options.
Removing the ability to pay by card, I'd estimate the business would lose a substantial share of clients, maybe in the range of 25%.
> Here in Europe, it is common to pay online by bank transfers, not by payment cards.
UK here. I pay my window cleaner and my tree surgeon by a bank transfer (from my bank's phone app app). If I buy a thing or service online or in a shop I pay using a credit card. It's almost unheard for medium to large companies to offer their bank details for a transfer.
You missed the point, banks have costs, banks are companies, banks must be profitable otherwise they collapse, crypto is very expensive to bank, banks have difficulty making profits on funds sourced from crypto, a responsible business you must prioritise (queens English) profitable customers.
My understanding is that crypto is expensive to banks because crypto is expensive to any legal entity in general.
And crypto kings not being able to hold their coins in their bank account doesn't sound like "debanking" to me, because it never was banked in the first place (some banks sure did handle it, but not the ones they're crying about).
I also can't get my bank to hold my beany babies either, and nobody calls that being debanked.
This bit is downright scary: "the bank cannot explain why SARs [Suspicious activity reports] triggered a debanking, because disclosing the existence of a SAR is illegal. 12 CFR 21.11(k) Yes, it is the law in the United States that a private non-court, in possession of a memo written by a non-intelligence analyst, cannot describe the nature of the non-accusation the memo makes. Nor can it confirm or deny the existence of the memo."
I get why this is insane but I also get why the law is there which leaves me in a wired spot. Part of me wants to say something along the lines of "make SAR's disclosable / viewable to American citizens or legitimate users" but you can't really do that because the bad guys will quickly exploit any escape hatches like this.
What do others think about this? Because I'm kinda stuck in the middle about them.
If there is evidence against you, you surely have the right to know of it and to contest it! That's pretty fundamental to any reasonable justice system.
You’ve stipulated that the debanking was ok but that not disclosing why was problematic?
How about this:
1. Corporations are highly regulated legal constructs. Being given an extraordinary right (immunity for shareholders) they should be expected to return significant value to society. I propose that value should be “lack of freedom of association” - eg I don’t think corporations should be allowed to stop doing business with, or refuse to do business with, anyone citizen, except after conviction in a court of law for behavior directly related to that business.
2. Government should not be able to use their secret monitoring to prevent anyone from doing anything. No lists, secret orders, etc. If government wants someone debanked, take it to court.
Finally, if corporations can’t debank people, how do they handle unusual cost/risk? With pricing, of course. If porn and crypto transactions pose extraordinary financial risk, then allow pricing based on actual financial risk.
The middle ground seems to be allowing SARs (which are analogous to tips to police officers), but not requiring banks keep them secret from the customer. The bank could decide to do so, but also could decide not to, like any other speech.
When a case is brought to court, they have to outline the methods used to determine the perpetrator. Why is it okay to do that for things like murder and other crimes but not for banks?
The law seems to be punishing people based on secret judgements over sealed "non-accusations".
Sorry, but no, I can't see why a country would want a law like this.
Honestly, my country had a dictator impose a Constitution that made sure every person had access to banks over 200 years ago (we haven't had a democracy at that point, but nobody even discussed it since, because nobody disagrees). I also can't understand how come the US treats that system so frivolously.
Stop with the Al Capone, totally dumb, angle: instead of arresting him for his actual crime, they arrested him because he didn't pay his taxes. Something dumb like that. And everybody applauds as if it was so brilliant. It's not.
What I think is: arrest people for the actual crime they commit... and leave honest people the fuck alone.
Of course it is scary. This is totalitarianism plain and simple. Secret laws. Secret rules. All these do exist (not necessarily only for SARs, where the law is not necessarily secret) when they definitely should not.
The excuse "(but) This is very much the law." isn't much of an excuse.
Last I checked the numbers estimated that, worldwide, KYC/AML costs on business where more than $180 bn while only $12 bn of funds were frozen. And frozen do not mean confiscated: a part of these are unfrozen and rightfully returned to their owners.
So that whole totalitarian, dystopian, system is a gigantic net loss.
And for what? To please bureaucrats who can do nothing else but push papers, create laws and rules and put ever more burden on everybody else.
But the worse of it all is that it gives a perfectly valid excuse for banks to debank anyone they don't like: seen that they don't need to justify anything they can just say "we're sorry we cannot say anything".
Wait, no, that's not the worst of it all. In several countries in the EU like France and Belgium the local IRSes do basically run ads explaining how you can denounce your neighbor.
I've heard a number floating in floating (devs in charge of these systems do talk): 25% of all the self-employed people have had at least one SAR.
On my LinkedIn I see people proudly posting 3rd-reich stuff like "The previous chief compliance officer said there were weeks where they had zero SAR". Basically implying that the previous dude was not filling enough reports and that he was so happy to get the job so that he could run those numbers up.
Burn that entire system. Just burn it to the ground.
There is no moral justification to freezing the bank accounts of truckers in Canada.
I don't care that "this is the law". Laws should be about justice.
This has absolutely nothing to do with being just.
I have a friend that is constantly being debanked and his wires getting lost because he has the same name as politically exposed Russian person.
Banks do not negotiate. They just kick him off and sometimes even lose his money.
There is nothing he can do, even though everyone who would look the issue would figure out it's just a shitty automatic system flagging it because of an unrelated person 's name. It would cost too much time and money for banks to fix this mistake, so giving a boot is cheaper.
Sounds like a big inconvenience, did he try to change his legal name?
Edit: I have no idea why this legitimate question is being down voted. I'm not suggesting that he should change his name or even that such a solution is an acceptable state of affairs. And the replies received re:past names are furthering discussion.
What's more: if you exhibit knowledge of the SAR requirement to a banker, they're supposed to file a SAR on you just for this, even if nothing else about your transaction trips the SAR threshold.
Absolutely, it's one of the most undemocratic, potentially violative of 1st amendment laws that is out there.
This is from the point of view that money laundering as a law is essentially thoughtcrime. The police state has done an orwellian job of normalizing not privacy, but instead telling the government the reason you are doing every transaction. Then, any attempt to not tell the government is "money laundering".
Of course, if you are the state, the powers of this tool are alluring. Imagine if the state could compel citizens to write down what they're thinking, and compel justifications for everything they do in life. Think of how many crimes we could solve! Think of how many bad folks we can catch ahead of time!
> ...is essentially thoughtcrime
> The police state has done an orwellian job...
> Then, any attempt to not tell the government is "money laundering".
Exactly.
But the really most shocking is the number of people that'll find excuses for such a dystopian system.
Now of course very few bite the hand that feeds them: when you literally work on software facilitating the handling of SARs, you need to do post-fact rationalization of your acts and life choices.
I hope the new administration burns that profoundly nightmarish system to the ground.
I don’t think anything was truly debunked here. Debanking is indeed a side-effect of AML laws and regulators, but as the article highlights, these laws are largely ineffective at stopping actual money launderers. Meanwhile, the vast majority of debanked customers are innocent. AML laws should be repealed entirely. Law enforcement should do their job and investigate crimes, rather than outsourcing this responsibility to financial institutions and effectively forcing them to be the "judge, jury, and executioner."
> these laws are largely ineffective at stopping actual money launderers.
Let's think about what the purpose of money laundering laws is. Nobody really cares about people concealing the source of their income in the general case. There's no purpose for money laundering laws just for that purpose alone.
The reason that money laundering laws exist is that one way to discover and prosecute crimes that people actually care about (human trafficking, drug dealing, various kinds of fraud, terrorism) is to "follow the money", and if criminals can successfully launder their money, it makes it easier to get away with their criminal activity.
The second reason that it exists is that money laundering _itself_ is often a much easier crime to prosecute than the underlying offense is. What KYC and AML laws do, and are extremely successful at is _not_ preventing money laundering. That would actually be undesirable for prosecutors! What KYC and AML laws do is allow people to money launder while creating a wonderful paper trail for prosecutors to follow and build a case on when they take an interest in someone from crimes they actually do care about. Chances are if you are money laundering, you have at some point lied on a banking form, which is a prosecutable crime, and a lot easier to prosecute than drug dealing and other crimes are, sometimes.
> these laws are largely ineffective at stopping actual money launderers
Money laundering could be the "think about the children" relying cry of the financial world. If international entities want better control over financial exchanges and a window into people's money, playing the money laundering card is a guarantee to get it passed without having to justify it that much.
The degree to which it has affected regular/everyday banking is pretty astounding, and is probably exactly what the regulators wanted from the start.
> Money laundering could be the "think about the children"
My hyper-liberatrianism is showing, but I've always been slightly irritated with money "laundering" being a crime in the first place. It's pretty far removed from the actual harm: money laundering is illegal because drugs are illegal and drugs are illegal because when people do drugs they do things that actually cause harm (to others and themselves). Like... I get the cause-and-effect chain there, but there's no evidence that these laws help anyway and they definitely hurt.
I didn't read the article but I do agree with you completely. I've noticed this repeatedly where if I've to move a small sum of money in/out of my country I need to fill 20 letters and 50 if it's a business. But if I have to move say $100MM? Banks will roll out a red carpet, no questions asked.
If it's left to the banks they are all too happy to serve anyone with money, we have quite a few examples[1] of that. Regulators want banks make examples of anyone which banks do by harassing small businesses which won't have monetary impact to banks' bottomline. My gut feeling is even regulators don't care much, they just want to pretend to the voters that they are trying to do something, anything.
> if I have to move say $100MM? Banks will roll out a red carpet, no questions asked
What are you basing this on? Every nine-figure wire I've seen issued was far more involved to get authorised than anything sub-million. (For obvious fucking reasons.)
>Law enforcement should do their job and investigate crimes, rather than outsourcing this responsibility to financial institutions and effectively forcing them to be the "judge, jury, and executioner."
Think there have being big pressure from banks and financial institutions to centralize power. AML laws seems just a way for the regulators to do it.
Banks and financial institutions see AML as a necessary cost center to continue operating as a business. They would gladly fire 90% of their compliance department if they didn't have to write hourly memos to FinCEN and join conference calls with the Fed. Power and money correlate, but money is ultimately what does the talking.
>This is not the world you live in. [A world where people get debanked for political reasons.]
I know quite a few people, and entities affected by it in Europe. Some of them even personally, individual accounts, not just their companies and organizations. I would elaborate, except I suspect that will be counter productive. Please read site guidelines. Let's agree to disagree.
The idea that the debanking of individuals on political basis has only happened in Canada is wrong. Furthermore, this also only happens to, let's say one side of the political dialogue.
> This [KYC/AML] will affect the typical user of the financial system precisely zero times during their lives.
I've been affected by this nonsense, and so have friends and family. Quite inconvenient when you're trying to buy a house and trying to keep things moving on time. I may not be "typical" but my mother certainly is. I can tell that patio11 is highly invested in the finance industry, not wanting to burn bridges, and I think he is incentivized to try to make people believe that KYC is beneficial and highly effective, but it's just not the case. It reminds me of the people inside Google working on their auto-banning systems who won't admit that it doesn't always work perfectly.
"Debanking will also not infrequently swiftly cascade to accounts in the same household, regardless of title (non-specialists can round this to “name on the account”; industry can’t). Banks institutionally consider those accounts in the same household to be highly likely to be under common control, regardless of what paperwork, account holders, or politically influential subcultures believe."
If people have actually read the article, they will have spotted the bits where patio11 himself has been adversely affected by this at least twice!
> I think he is incentivized to try to make people believe that KYC is beneficial and highly effective
I don't think the article is arguing that at all. It's describing the "system", not endorsing it (and explicitly complaining about it in several places).
If nothing else having to do more paperwork is very common.
British banks tend to not open accounts for people abroad because of the cost of KYC, and they even close accounts if you move abroad. Difficult if you have assets or a pension in the UK but live abroad. As you say, it makes it very hard for people who move around.
There are definitely political biases in closing bank accounts in the UK, and many cases of accounts being closed because banks did not like someone's politics. Not even fringe political views, associations with the previous government's part has caused problems in some cases, and definitely association with smaller but significant parties.
People also avoid taking on jobs that might make them "politically exposed persons" because the rules are too broad, and that (although it affects only a few people) does a great deal of damage because it reduces the number of people from outside in organisations, which worsens governance and corruption.
Also happening in Japan. Quite a number of big-name vendors like DMM, DLsite, and others are getting heavy pressure from Visa and Mastercard to censor certain merchandise for no justifiable reason (as in no legal basis) and in some cases have been blacklisted outright.
The Japanese response, and this is after placating the first round of censor demands, has been to reverse-blacklist Visa and Mastercard because Japan realized that giving an inch only means they will then demand a mile, then a league, and so on.
We live in a society. There were a bunch of pedos in the Netherlands who tried to start a political party to change age of consent.
It did not go well for them.
The middle class and below live paycheck to paycheck so that's an issue they don't have. I suppose the author refers to this (ironically or not)
But debanking happens, or has happened, to _almost_ everybody who has some assets and cash, probably from the higher middle class until the ~1% .. as for the super wealthy, this class enjoys offshore private banking, has assets split into dozens of accounts and is mostly unbothered by AML.
> debanking happens, or has happened, to _almost_ everybody who has some assets and cash
I don't think this is true. I know many people with assets and as far as I know, none of them has been debanked. Surely I would know someone who has been debanked if almost everybody with assets has been.
You need to provide data behind your claim that debanking is so widespread as to use the word almost everybody.
Never ever heard any person I know being denied banking services, except for some unlucky (were they?) entrepreneur with very shady is-he-laundering-money situations.
> But debanking happens, or has happened, to _almost_ everybody who has some assets and cash, probably from the higher middle class until the ~1%
Can you back up this claim? The wealthier you are the less chance you're going to be debanked. Marc Andressen and all the crypto bros will never have an issue with debanking. Banks are rolling out the red carpet for him and everyone else with his net worth.
What they (1%) want is to own the bank and own (and create) the currency without ever having to be an actual bank. They invest in crypto to make a massive profit, and it's foolish to play along with these things as some sort of benefit to society. Together these guys could end world hunger and still have more money than they would ever need, but no, they've decided VBucks are a pressing issue.
It's interesting that the idea that 'banks should refuse to do business with potential terrorists' is something that most people I know support, or don't care about.
Until it happens to them. Then suddenly they get quite passionate about the state that the world is currently in.
I don't have data on how many people are being debanked, but anecdotally it definitely seems to be some kind of 'line go up' number, and I wonder if cumulatively it will get to some kind of critical mass where we have a large enough percentage of people make enough noise that the laws are reigned in, or if they'll be 'that group of weirdos' forever.
> It's interesting that the idea that 'banks should refuse to do business with potential terrorists' is something that most people I know support, or don't care about.
I tell them about the "terrorists" truckers who went on strike in Canada and who got debanked for going on strike.
> (I almost got debanked once -- I had my account re-instated after many weeks of extreme stress ...
You tell me. I had to fill nearly a PDF with nearly 50 pages justifying where and how I bought groceries and how I put tank in my car because they somehow thought I may not be living in the country I said I was living in.
Same things: weeks of insane stress but, eventually, they said things were OK.
You're not a weirdo. People don't realize we live in a Brave New World, complete with secret ESG score (assigned by banks to customers), etc.
Many simply have blind love for the state and they'll never question any rule made by the state.
So they'll state: "But banks are only following the law!". Which is precisely the problem: such laws shouldn't exist.
I live in a country where it's all about banking finance and most don't realize they don't produce anything at all. It's all about KYC/AML/compliance/SARs/fiscal lawyers/etc. A big, gigantic, void.
While you see SpaceX going from their Raptor 1 design to their Raptor 3 design, using the "idiot index", where things become more efficient and way cheaper, bureaucracy (and their banking following dogs) works the other way: everything becomes less efficient and more costly.
all of the laws meant for terrorists are being applied to normal citizens at an astounding rate, things like border crossings and these unconstitutional laws like the patriot act have really undermined people's rights
A few years ago in Russia, when protesting was still barely legal and possible, prominent opposition leaders were 'fined' for ~1M USD each for damages to businesses what happened due to some protest activity. Banks simply deduced every account balance by -50000000,00 RUB and have a nice day.
Whoever thinks that 'but that was bad, evil Putin's government and our nice, good government would never do such a thing' should think again. The government should not have such power at all, neither directly, nor via bank proxy that would 'independently' refuse you service.
When you happily cheer that in EU you can't pay with 500 EUR bill (because tax evasion, crime, etc!!!), you are basically helping the government create means to financially strangle anyone the government doesn't like. One day it might strangle you.
How could they not have the power? All power the banks have is directly derived from their ability to operate as they do within a currency regime that is directly controlled by the state. Best case is it's your state; plenty operate in a system controlled by a foreign state.
> ... [debanking] often gets conflated with declining to open an account for a person or a business ...
A reasonable perspective. But the obvious follow up is what one pithy word should be used to describe this activity? The proffered terms (offboarding, derisking) are being suggested by the industry with an obvious political motive to minimise the significance of what they are doing.
There is an ongoing war against the pornography industry that has been waged in part through payment processing. The entire thing is an intense mish-mash of poverty, wealth, politics, drama, technology and major social forces clashing with each other. It isn't appropriate to talk about that sort of action in bland terms. There is an attempt being made to sculpt society by leveraging the financial system. The implementation details of that isn't "offboarding" or "derisking" - it is much more in the spirit of a word like "debanking".
I'm with the activists on this one. It makes more sense to redefine the word debanking to cover politically motivated (or even motivated by business-logic) denial of a bank account. These are not bland administrative decisions.
What's the point of this windy article? An allusion to "debanking people is OK actually!"
Allowing the bank remove your financial lifeline via some opaque and kafkaesque process where you have zero recourse is not OK and we should not tolerate it.
This is specifically a response to Andreessen conflating crypto offboarding with "debanking" on Rogan. The goal is to inform you about the regulatory and political environment around banking and crypto in general, and to warn you to be wary when a crypto investor uses terms like "debanking" to rally favor for their cause, which is to integrate crypto into the banking sector.
The point is that reality is more complicated than short statements (which often embed political assumptions) can express, and understanding the reality of the situation is useful, especially to people who want to change the system.
This is a valid point. Banks should compete for customers by providing value. They should also be free to decline customers to ensure quality. However, debanking due to perceived or real regulatory risk is ultimately a political act. The banks may not be exclusively political actors, but they are incentivized to act outside of market concerns by state pressure.
Similarly, one of the alleged intentions of the cryptocurrency movement was to decouple the state from monetary control.
> An allusion to "debanking people is OK actually!"
Literally the opposite of what he says. He says it happens too often to too many people, and that mostly it happens to people who are immigrants or don't speak english well or are financially illiterate, or just generally people at the margins, and not to privileged crypto bros.
> any form of "political debanking" — where financial services are withdrawn or denied based on political beliefs or expression is completely unacceptable
RTFA. He goes into great detail around how someone naive can conclude they were disconnected based on political beliefs when in reality it's something mundane or stupid. Misdiagnosing the problem as political debanking entrenches the problem.
We have a problem with access to financial services, particularly for small businesses. But it won't be solved (except for crypto) if it's branded as political debanking.
In the UK, there is no concept of "universal service". if you look dodgy, your bank account can be closed. However unless there is strong evidence of fraud, you should be able to get your assets back, assuming that you can find a bank to take you.
But
Its more often the most vulnerable that cannot get bank accounts. If you have no fixed address, then you are not able to have a bank account.
If you work in stuff that looks like a prude to be sex work, you are also extremely vulnerable.
so yes, its great that this might be looked at in the USA, it won't however get reform, because its a very powerful and useful tool for the an administration to pull on when it wants to exert pressure.
>In the UK, there is no concept of "universal service".
The nine largest banks have a legal duty to provide a bank account to any eligible applicant under Part 4 of the Payment Accounts Regulations 2015, except where providing an account would be unlawful under other legislation (fraud, money laundering and terrorist financing) or where the customer has engaged in harassment against the bank's employees.
>If you have no fixed address, then you are not able to have a bank account.
The above legislation applies to customers with no fixed address. Two banks offer products specifically for customers with no proof of identity and no fixed address. Many others have significant flexibility in their identity and address requirements.
Alas my edit time has ran out, otherwise I would update with your correction.
Thank you for correcting me with sources, it is appreciated.
The People I know who have no fixed address, told me how difficult it was to get an account. I know when I opened my account recently, I had to provide a whole host of information that wouldn't be possible to have if I was homeless. I made the mistake of projecting incorrect assumptions, confidently. I went full techbro, which is wrong of me.
In the Muslim community, we have a phrase for the phenomenon of many of us getting debanked: "Banking while Muslim"[0][1]. LaunchGood was debanked a few years ago and really had to struggle to survive[2][3].
My own startup was threatened to be kicked off Stripe with just 24 hours of notice. It took an exhausting effort and connections with employees inside Stripe to escalate our case to get our case re-reviewed. Google Payments for the Play Store halted payment processing randomly and sent me a message demanding to get copies of my passport and other details. When I sent it, they said they'd respond in 72-96 hours and just came back saying they needed the same document again even after I sent it. This repeated several times. Every time I contacted them, they came back with an automated response saying that they'd look at my message. After I asked for escalation to an account specialist, the specialist said they'd get back to me in 96 hours. That situation also took escalations with friends at Google to get sorted out in the end, but not until we spent two weeks churning subscribers and losing revenue.
I was debanked by a California bank for selling holsters, a product that is legal nationwide and protected under the Constitution. While the bank has the right to choose its business relationships, it’s concerning to see decisions driven by political positions. This sets a troubling precedent for the direction we might be heading as a country.
it should have been a central point of the election, it's crazy that this only came out afterwards. we need a basic right to our own banking with due process
The PEP part of the Rogan interview was when I understood Andreessen was most likely bullshitting.
Funny how this is not clearly stated, most likely because of who Andreessen is.
I wonder why Andreessen needs to use disinformation to shape opinion if the actual problem is so bad? I find it very unlikely that he does not know how PEP actually works.
It is so demonstrably false. Anyone who has worked in an finance adjacent industry likely knows the definition of a PEP.
Seems to me that he has crypto-related goals but involves more people to gain political support.
The OP article's last paragraphs make it quite clear IMO.
His argument seems to boil down to a the financial regulator equivalent of the trolley problem.
In Operation Choke Point, the regulators were actively moving the lever to debank morally repentant industries. In "Operation Choke Point 2.0", the complex system of regulatory guidelines and actors seemingly self-coordinates to debank crypto, and the failure of anyone to intercede is painted as a willful neglect. Those on the regulator side say, "I didn't do anything", and those on the crypto side say, "you have every power to do something".
The point is that Operation Choke Point was an actual operation, but Operation Choke Point 2.0 is not; it’s just a label that someone started using to try to generate sympathy for their private business goals.
And a smart reader should recognize the difference and adjust their reaction accordingly.
Seems to me that what Andreessen was really mad about was the CFPB forcing his portfolio companies that committed consumer fraud to return money to their customers. He also lied about the CFPB doing debanking, they don’t have that power.
While debanking may be a problem, there’s a false populism in these disingenuous VCs, pretending that their troubles are the same as everyone else. These guys want to operate in grey areas that enable laundering, illegal gambling, buying/selling contraband, and straight up rug pulls, and not be subject to any risk or oversight.
I used to respect patio11's opinions, and obviously he has a lot of valuable knowledge and there are things to learn from him, but some of his takes on crypto have led me to heavily discount his writings on the topic.
On the face of it, this writeup is reasonable.
I'm a crypto founder, and I struggle with banking. We've had two banking applications rejected in Singapore.
Here's the thing: we're not doing anything remotely like what Patrick describes. I think he strawmans a lot.
We're a crypto-focused IT consultancy, but closely affiliated with an upcoming blockchain. The business is set up to be super boring: we bill the client for work and that's it. The company doesn't handle a token, doesn't get revenue from onchain activities, ... The blockchain in question is not anymore risky than any other and in many ways less. Not that the banks know or ass.
They just say "you're rejected and we can't tell you why".
Now this is Singapore, not the US. It's not a targeted plan but just general policies: "crypto is potentially bothersome for us, let's not bother". In the meantime we don't have a bank account. Though I do believe US attitudes and (lack of) regulation probably impact these policies a fair deal.
I’m one of the few people who can truly say I’ve built a bank from scratch—starting as a single individual in a small office and eventually obtaining a full banking license in one of the most highly regulated financial environments in the world, Australia.
I invited Marc Andreessen for a conversation on X (formerly Twitter), after the Joe Rogan interview. It is no surprise I didn’t receive a response when he’s one of the wealthiest and most influential figures in tech, and I’m certainly not even the richest person on my street.
At its core, a bank’s business model is straightforward: you act as a caretaker for depositors’ money. Your primary obligation is always to ensure that depositors can withdraw their funds in full, whenever they need them, within the terms of the contract. Profitability is achieved by carefully managing risk—both in holding deposits and lending them out—while making sure that, at all costs, you can make every depositor whole.
In practice, this means thoroughly understanding and mitigating risks. To do so means we identify every possible scenario, assess its likelihood and potential impact, plan how we’d mitigate the risk, and determine the residual exposure. Our regulators then review this work, probing relentlessly, testing our assumptions against extreme hypotheticals: floods knocking out our data center, hackers encrypting our backups, simultaneous runs on accounts associated with crypto exchanges—every remote yet plausible crisis is considered. We then refine and repeat this cycle until the regulators are satisfied we understand every angle of our risk profile.
Every mitigation strategy we implement has a cost—whether it’s the liquidity we must set aside or the capital reserves we are required to hold. If the regulator believes any exposure is excessive, the bank must increase its capital buffers, making the business more resilient but also more capital-intensive.
From a traditional perspective, stable term deposits or mortgages are ideal for banks. They’re long-term, predictable, and well-understood, with minimal servicing costs. In contrast, servicing the crypto industry poses unique challenges. While there can be mutual benefits, the costs and constraints imposed by regulatory and liquidity requirements often clash with the crypto sector’s expectations.
Ultimately, it’s a cost/benefit analysis. Crypto-related accounts tend to require holding large liquidity buffers, limiting profitability. Banks must maintain extremely high-quality liquid assets because these crypto accounts can be called upon at any time, as they are generally setup as an on-ramp or off-ramp for the exchanges' customers. If a bank is required to hold 100% of those deposits in liquid form just to meet potential instant demand, the profitability of such relationships diminishes. Once you factor in operational overhead, compliance, and the capital required to ensure depositor safety, the margins shrink even more.
Capital adequacy is another critical complication. The bank must have sufficient Tier 1 capital to cover all depositors in the event of a collapse. This includes provisioning for winding up the bank and ensuring depositors remain whole even if certain assets become illiquid. The instability and occasional outright fraud we’ve seen in the crypto domain (e.g., the FTX/SBF scandal) means that funds could vanish or become tied up. As a result, banks often need to raise even more capital or reduce shareholder dividends. This is costly, and that cost must be considered in pricing and strategic decisions.
Finally, the operational and compliance costs associated with handling crypto transactions—from specialised staff to advanced monitoring systems—can be prohibitively high.
The reality is that the associated liquidity, capital, and operational requirements often make it an expensive proposition with limited upside for the bank. At the end of the day, the bank must always ensure depositors are protected, and that priority imposes constraints that may not align with the crypto industry’s expectations.
I guess it is surprising that crypto service providers cannot come to an agreement with banks by just paying more money for the service or by implementing some rules for their users which would allow some portion of their bank deposits to be held in slightly less cash-like assets.
It's more than just money: A payment processor is not all that different from a crypto exchange in their relationship with the bank: It's a very special company that can bring real risk to the banks underneath, so they have to do a lot of regulatory work internally to keep working together. The Stripes and Adyens of the world spend efforts in regulatory because they have to keep the bank happy, but they find those efforts just cost money, not harm the actual goals of the business.
Many of the crypto services believe that no, there's no way they'll do what the bank tells them and still remain useful to their clients. They'd have to compete with the truly off-the-regulatory-world competitors, and probably lose a lot of business there. So they get unbanked, in the same way that I'd get un-bared if I decided to keep showing up at said bar with the same clothes as Donald Duck.
I think one of Patrick's points is that the real cost to the bank for providing these services to crypto companies is more than the entire profits of the crypto companies. So there is no mutually agreeable meeting point.
Given all the rightfully angry comments and descriptions in here about how easily megacorp banks and financial institutions can debank people on a whim with next to zero recourse, one wonders why nothing like some sort of cryptoraphically generated, decentralized token ecosystem doesn't exist by which people can send each other usable monetary value rapidly and via many avenues that are difficult to block...
We could call it, crypto... currency, maybe?
Wouldn't it be nice of something like this existed, at least as an option for those who don't live in bubbles of never having been the financial rape victims of a large bank, government or formal regulatory algorithmic system.
I think this was his best article yet - it lays out all the various things that have been conflated under "debanking" - some justifiable, some less so.
I have no idea where Patio11 sits politically, but as someone who tends right I would say it was a fair description of political debanking (and social media deplatforming), if North America-focussed.
And I think it would be fair to characterise Patio11 as a crypto-sceptic.
I don't feel like the article is particularly in favor of or against debanking in general. (I think in fact that his position as stated is that debanking in general is bad unless it's against people he doesn't like, which is a position held by literally everybody.) Rather, it's an examination of why debanking exists in general and why "bank everyone you're allowed to" isn't the dominant strategy, what factors go into influencing politically-driven debanking, and whether or not the current argument made by cryptocurrency advocates that "we are being debanked for political reasons" is true or not. It concludes that while crypto is being debanked (or equivalently but less provocatively, banks are declining to create new relations with them), it's primarily because crypto has historically been bad for banks. This in turn has created a(n arguably political) culture among those who decide who shall be banked or debanked to not service their industry. In other words, crypto isn't being debanked because people morally disagree with them per se, but because crypto is simply extremely risky
tl;dr of the tl;dr: the article is primarily about systems around debanking and only secondarily about whether or not crypto is being debanked (conclusion: it is and it's not necessarily for political reasons)
The main problem with the article is that, while patio is a very knowledgeable and even insightful writer, he has an extremely indirect writing style. It almost feels like a math textbook that describes "here's the properties of this mathematical construct; you can immediately see it has these properties" without explaining the connection to the other mathematical constructs that give it these properties. In his defense though, his writing is a more gradual progression between "here's a thing" and "here's the implications of the thing" than a typical math textbook. But he still doesn't explicitly point out the connections, which means you have to expend a lot of brain power to hold enough things in your head at once to make those connections yourself, which is exhausting. Part of that is because the connections are social connections that are far less clear, defined, and observable than typical STEM systems, and he doesn't want to ever tell you or imply to you anything incorrect. Contrast this to Matt Levine who will gladly tell you how a social system works in a step-by-step list, followed by how the example he's about to write about completely breaks that system
The implication that Libra was killed by a letter from 2 U.S. Senators is hilarious. That’s not how businesses make major decisions.
A public letter from a couple Senators is not a leading indicator of a regulatory problem. Individual Senators have essentially zero regulatory power whatsoever.
It is a trailing indicator of a PR problem. The Hill staffer he quotes is trying to point this out, but Patrick misses it. Perhaps he does not have the personal experience to understand this aspect of what Congress does (unlike the regs he covers earlier in the article, which he clearly has working knowledge of).
If you are debanked can you not sue for defamation and slander? After all, only criminals and terrorists get debanked, and if that's happening to me that's a public statement by a public corporation.
There is also the problem of punitive action (debanking) upon suspicion of wrong-doing rather than the conviction of it, which is a violation of due process on the side of the government.
there was no way to sue because the banks were debanking anyone involved in crypto as a "politically exposed person". this was a regulation forced on the banks by the federal government. any bank not following this policy would then be caught under a million internal investigations by the feds, which is excruciatingly painful for them. as such, the banks weren't liable for following procedures, and the feds weren't "responsible" for it as they were very passive aggressive in writing and enforcing rules in such a way that didn't expose them. it wasn't said openly but it was deeply assumed with an undertone meant to circumvent the law. the politically exposed thing had been done prior with gun manufacturers and weed dispensaries so it had some kind of precedence
he described it as a puppet with no master above the strings
i completely agree that's it's 100% illegal, but there were a number of people who apparently had this same problem yet had no real legal recourse. i don't fully understand it but i assume a bunch of well off founders would have been able to figure it out. their only solution was to apparently support trump because it was so heavily tied to the left wing establishment.
Why is this article so longwinded? I understand that there are nuances to every subject but does the article it give clear solutions if one is 'debanked'?
The article’s refusal to acknowledge that there might be viewpoint discrimination going on makes it feel like the author is trying to do a Jedi mind trick.
Bleah this post was overly wordy by 10X and so meandering it was really hard to read. I gave up after 15 mins and realized I was only 1/3 of the way through. My suggestion to the author is to break this up into smaller essays and be more succinct with less meandering.
What's infuriating to me about this article is that bank "supervision," makes banks a direct proxy for policy via nominally private bodies but without any public accountability.
Well regulated banking is a national asset and source of soft power internationally, and having a bunch of anxious de-bankers at the controls is a hollowing out of the common wealth of the society as a whole.
In Germany the political climate is so bad that the domestic intelligence publicly confirms on social media that they have person so and so on their radar. This had no consequences. Let that sink in. In such a climate it's sometimes enough to publicly scold a bank on social media to have blogger XY as their customer to trigger debanking. In one case, some blogger called a politician "fat", which caused the FBI equivalent to request the bank account history from the bloggers bank, which ultimately caused debanking.
So in Germany it's used more Stasi like, meaning protection of the government. They changed the objective so that the scope of the domestic intelligence is no longer groups of people who want to overthrow the system, but also individuals that "deligitimize the government and it's representatives". That is, criticism about the Covid measures can put you on the radar of domestic intelligence. An independent left wing journalist did a FOIA request and found out she's on the radar because of just that.
A perfect climate for debanking measures and some hint on what is going on with Germany in case you wonder...
> which caused the FBI equivalent to request the bank account history from the bloggers bank, which ultimately caused debanking.
I don’t know which person you have in mind but the situation in Europe can’t be directly compared since you have a right to a bank account. You _cannot_ be debanked. You have a right to a “base account” (under some conditions).
Debanking to me doesn't just mean "no bank account". It starts with closing of accounts without being given a reason and the constant fear that any new account will be closed as well. For businesses this has even bigger implications.
You a right: There is base account meant for refugees, homeless people, indebted people... This is nothing more than a safety net for when you are at the bottom of society. You can't do business with it etc... If someone where to be forced to register such an account because all banks closed the normal accounts without giving a reason, I'd still consider it debanked.
I am sorry but the OP is writing a lengthy article to legitimize his claim?
Here is the point, as I see it and it is very simple: If having a bank account is a requirement to operate legally, a bank can NOT refuse any customer unless they have been barred by a court. It doesn't matter whether you are selling crypto, weed, porn or socks.
This is done in France, and many other countries by the way. The bank has an obligation to service, as your life's obligations requires such a bank account.
Pat went on a dozens of pages of non-sense to avoid this particular point explaining how the banking system work, the bank obligations and other crap. It's just a bunch of filler non-sense that doesn't address the core point.
That doesn't make any sense. As the article points out, it's akin to saying that a lender must loan to you unless they've been barred by a court. The accounts you are thinking about are all, under the hood, lines of credit, even though they don't look like that.
> The accounts you are thinking about are all, under the hood, lines of credit, even though they don't look like that.
You present this statement as though it's an immutable law of nature, rather than a design feature of the US banking system that allows them to offer an excuse for closing accounts that's convenient for those banks. (The fact that someone on HN can read about it and feel smart because they think they understood the deep reality that lesser people don't get is also a convenient design feature).
No, it's not akin to that. You can live without loans but you can't leave without a debit bank account.
As the parent points out there's indeed such a law in France but from personal experience I can tell that it doesn't prevent the bank from closing your account without an explanation (the explanation I was given off-record was my citizenship). The law merely forces the bank to open you an account which can later be closed. So definitely the right direction but IMO not far enough.
Since the Fed is the provider of the liquidity and also sets the rules on what is a collateral and what is not, I say yes, the bank must loan you the money as long as you satisfy the conditions of the loan.
The bank is roughly a re-seller of the Fed liquidity. They shouldn't be an arbiter of who gets to access that liquidity but rather an administrative entity that follows the rules.
It makes perfect sense because of the very bloody obvious point that your account isn't really a line of credit since you gave a full deposit equal to the funds you have available. If the bank wants to lend your money around as part of its fractional reserve process, that's their business, but opening an account with funds you expect to have access to at any time is not the same as asking for a loan. Please.
It definitely happens for political reasons. Let's be honest here, this is a completely one-sided hunt. And it's the next step in provoking war of retaliation amongst a political populous from an establishment that's losing power. It's disgusting.
Anyone should be able to have a political opinion or open a crypto business without needing to worry about the sanctity of their bank accounts. Let's just all agree this is abhorrent behavior and to stop this immediately. It's happening all across the west and it needs to just stop. Political competitions should be fair, not insidious.
Wouldn't your argument be far more defensible if it wasn't dripping with a siege mentality and provocative, yet unfalsifiable claims? Youre a step away from claiming that the children yearn for the mines.
it happens in europe, canada, and did in the US, so it's not just not unfalsifiable, it's provably true.
it's definitely not a siege mentality to say "let's treat each other fairly despite political differences". i don't know what you mean, the rest is nonsense
This is a very strange read. My initial feeling was that it was an awful lot of verbal gesticulation aimed at simple gaslighting. Having read most of it at this point it almost reads like it's trying to confirm the hypothesis while saying it's doing the opposite. I really dunno what to make of the piece, but it's kind of an exhausting read.
I think you are exactly right. patio11 both wants to communicate a point and also understands that communicating certain points can lead to really bad outcomes for you and your family. Thus he often writes that way about topics where powerful individuals might wish to harm him for his opinions. Such is the way the world really works, regardless of whatever naive people were taught in school about freedom of expression. “If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him.”
As always, he moves the cup so flashily for so long that you forget that you never saw him put the ball under it in the first place. If you take it as read that Binance (the largest threat to his business interests) really are evil, then of course destroying any bank willing to serve them is perfectly justified.
I also love the impersonal gloss over the actions of all the bank employees, as though all the Operation Choke Point crimes were carried out by machines directed by the politicians and regulators, and not humans making the choice to be Quislings. Look at the quote from Zuckerberg where he expresses regret for the poor choices he and his company made, and note the conspicuous absence of anyone doing the same from the banking/finance industry.
Those of us who've been paying attention are not hearing about debanking for the first time now, we've been banging this drum for years. In a country with the US' asset forfeiture laws, denial of banking service is de facto denial of the human right to own property. The current situation in the US is shameful, and while part of that shame should fall on the politicians and regulators, much of it rightly falls on the banks themselves. (Nor is it that an alternative is impractical. The UK made it legally obligatory for banks to offer "basic bank accounts" to everyone in 2016, and the sky has not fallen).
I have no love for the crypto people, but they're fighting for the right thing here (whether they're doing so out of good motives or bad) and I hope they succeed.
However there's a vital layer of ambiguity in that story which made it more confusing for everyone involved: Coutts is a long standing "private bank" which makes a point of not serving everyone, only HNWIs, and Farage fell into both the "not rich enough" and "too politically exposed" categories.
> The current situation in the US is shameful, and while part of that shame should fall on the politicians and regulators, much of it rightly falls on the banks themselves
Like the lack of consumer protection and public safety in the US, at some point you have to accept that the public are also ultimately responsible through the ballot box. US financial control systems are driven firstly by the catch-all "war on terror", which since 9/11 has been used to justify any and all authoritarianism with public support, war on drugs ditto (despite state level legalization!), and thirdly evangelical support for Operation Choke Point.
The Farage situation hardly applies as an example, if at all.
From the linked Wikipedia page:
> NatWest, the owner of Coutts, initially claimed that he failed to meet the Coutts eligibility criteria of holding £1,000,000 or more in his account, following the expiry of his mortgage. NatWest instead offered him an account with the retail side of the bank.
So it's hardly a case of debanking a random Joe. It was only a higher-end account that was closed for not keeping the requirements for keeping it, and Farage was offered a normal account.
I almost wrote about that case, but my post was getting long enough already. He was denied the fancy account he had and offered a basic account. Obviously you can have concerns about that (and note that this was a scandal, and ultimately brought down that bank's CEO), but it's certainly orders of magnitude less bad than being denied access to the banking system entirely.
> at some point you have to accept that the public are also ultimately responsible through the ballot box
Up to a point. Abusing some small minority is a well known failure mode of democracy, especially if you can paint that minority as bad people. And arguing that the public shouldn't be outraged about this because the public obviously approved of it is circular and backwards. Who do you even vote for to express outrage at debanking? It seems like the sort of thing that the CFPB should be stepping in to stop, so you vote D, but if you believe what the article wants you to believe (you shouldn't) then the problem is FINCEN so maybe you vote R and hope they dismantle it? IDK, flip a coin?
So you are saying that a private company, i.e. the bank must service the crypto industry even though it is going to mean they will suffer massive losses in doing so?
See my explanation of why it is an extremely costly venture for banks.
My position is that banks (which are not "private companies" as normally understood, but heavily regulated entities whose status already involves a complex bundle of special rights and special obligations) should be obliged to provide basic banking to any legally operating individual or business, just as they are already obliged to offer various services that they probably would not if they had a free choice.
If they are unable to figure out a way to provide basic banking without extending credit in the way patio11 describes then this will of course be extremely costly for them, but I suspect they would figure out a way to not have to extend credit rather quickly (hint: look at what banks in virtually any other country do) if they actually tried. If not - i.e. if the current price of banking is only sustainable when banks are permitted to arbitrarily refuse service - then I guess prices will have to rise to something similar to what they are in countries where banks already have those kind of service obligations. Again, that doesn't sound like such a terrible fate.
Not familiar with the UK version, but these kinds of regulations usually apply to personal bank accounts and do not require extending any credit. So you'd only get a basic bank account that cannot be overdrawn, nothing more.
The cost is here due to AML regulation. If government wants to outsource its duties (crime intercepting) to banks, then perhaps it should be government to pay for it (in the similar manner it pays telecoms for wiretapping).
> Look at the quote from Zuckerberg where he expresses regret for the poor choices he and his company made
I'm sure Zuckerberg does have regrets, but I think it's a mistake to assume they align with actual human interest except by coincidence. The state of Facebook today, and for many years before, has nothing to do with any honest concern for human welfare, however misguided.
> and not humans making the choice to be Quislings
What is with the obsession with calling people quislings? Have all the nationalists transferred their hyper-patriotism to more socially acceptable targets, instead of just learning not to be like that?
If it's a current trend then, much like with complaining about debanking, it's one that I was years ahead of the curve on. Humans should not blindly follow orders, and that you were following orders from the legitimate authorities does not absolve you of responsibility for your choices.
Like everything related to politics it's about plausible deniability.
The founding fathers sold their ideas as freedom from the tyranny of the crown. While this was true, they probably didn't care as much for the freedom of the average Joe, but their own freedom and that of their rich friends. They just needed the freedom of the average Joe to get the masses on board without blatantly lying about their actual goals.
The rich people of crypto see themselves similarly, selling their ideas as freedom from the tyranny of traditional finance; and they have a point: There are millions of average people out there who suffer by the hand of financial institutions. However, the goal of the crypto "elite" is mainly the freedom of their own and their rich friends, they just need the freedom of the average Joe to get the masses on board.
Now, the only thing left to argue is if the rich people from back in the days had a better case against the crown as the rich people from today have against traditional finance.
It's literally in the UN declaration, and widely accepted as a basic right. If some philosopher thinks there is some sense in which it isn't a right, so much the worse for their philosophy.
For the benefit of people who come to the comments first: If you want a comprehensive debunking or substantiation of the claims about crypto debanking, then this is not the place to go.
If you want to read 23,000 words on banking regulation, its uses, abuses, the incentives faced by both the banks and their watchmen, and an explanation for how we ended up where we are, then go ahead and jump into it. Personally, I think the latter is far more useful than the former. I enjoyed it, at least.
Bear with me; the free market seems to think that history isn't a very useful area of study, and lots of people agree. At least some of this probably comes from bad experiences with history classes. I like to think of history instruction as having three levels. The lowest level - the one you'll hear people complaining the most about - is presenting history as a dry series of facts. At it's worst, the entire course can be reduced to a hashmap; event -> date. Rinse, repeat.
The second layer presents history as a narrative. Most people like stories, so this is much more compelling, and makes it a lot easier to enjoy history. But the highest level of teaching is about systems. It's not enough to colorfully explain that King so-and-so was furious at the offense given by King the-other-one. You have to try to make students understand the world that these two kings existed in; how things as small as calling 9th-century European polities "countries" can disastrously mis-callibrate our models. Once you understand the system that someone is working in, you can hope to understand them, and why they do the things they do. Once you have that, you can hope to pass reasonable judgement on their actions.
This article is all about systems and tradeoffs. It is aspiring to that third level. The title is arguably a little bit misleading, but I think it accomplishes it's goal, and personally, I feel like I've come away with a reasonable overall understanding of his thesis, and I think it matches the title.
I think it's one of his better pieces and in some way a culmination of a lot of things he's been writing about; I think he's counting on people to actually read his previous posts about why e.g. business bank accounts are functionally credit products, not the financial equivalent of water and electric service, and it really helps if you understand some of those details.
I assume Kayne found another bank, just like patio11 did after he got debanked. Those stories aren't that interesting. The juicy cases are when no bank will deal with someone.
Debanking is part of the culture war now, which means that someone's reaction to it shows that they're either on the right or on the left, with no positions in between allowed, and that therefore they also support all the other culture war positions of their chosen side. The culture war is designed to bundle positions together like this, and to force issues into the bundle, in order to foster an us-versus-them feeling about every issue. It's possible to recognize this is happening, attempt to analyze the issue and the merits of each side of the argument, and come to a conclusion that one side or the other has the better argument. It's difficult though to convince others that your position is not because of culture war dynamics because the design of the culture war is to minimize independent analysis.
I think that debanking is absolutely a right wing false victimhood propaganda narrative, but I'm still interested in why they think it's an issue, partly in order to engage in the argument and defeat it based on facts, and partly to continue to learn the foundations for their side of the culture war in general
People whose business is effectively a grift should not be offered banking services, both as a moral issue and as a good business decision.
Right-wingers are far more likely to be grifters.
So right-wingers are more likely to be debanked but correlation is not...yadda yadda.
The tech industry was a lot cooler back when it was mostly graybeard hippies and not a bunch of incel adjacent techbros who never grew out of their Ayn Rand idolization phase.
I'm not sure I got the gist of it right, but not willing to go a second time.
This was specifically about banks and their regulation, and I think it misses the more vague and less accurate sense that financial institutions can remove players and customers from the market basically at will, which would be the reason given by people going to crypto IMHO.
To his point it doesn't fit "debanking", but if tomorrow VISA and Mastercard decide your online business is stinky, holding a bank account won't help you in any useful way.
That's basically what happened with Porn, where even if you had a very tightly managed and stricly lawful business (let's say you produce clay stop motion porn movies), you'd still be kicked off payment platforms.
Sure there can also be interesting discussions about actual bank account closures, but I think it's a lot more of a minority, there's better recourses, and most decent countries will be willing to guarantee citizens can get some form of banking whatever their situation.
> Sure there can also be interesting discussions about actual bank account closures, but I think it's a lot more of a minority, there's better recourses, and most decent countries will be willing to guarantee citizens can get some form of banking whatever their situation.
I think you're just speaking form your personal point of view as an entrepreneur. Losing access to the payment system would be the end of your career, yes. But losing the ability to hold a basic checking account would be a death sentence for most normal citizens, including you.
Think of everything that is primarily paid in checks or bank transfers. Think of all your income that you receive primarily in checks or bank transfers form.
Now think of using cash for those use cases. You'll quickly find that it's untenable and sometimes plain impossible. Cashing a personal check your grandma sent you? Forget about it. Cashing a pay check? Go to one of those cash-for-check places that keep 20% of it!
"death sentence": about 5 million households in the US do not have checking accounts. Although it's a great inconvenience, and in many cases may be an injustice, it doesn't seem incompatible with life.
Note that a "normal" checking account customer poses basically zero risk to a bank - money goes in via direct deposit, comes out via debit, ACH, and withdrawals, and the bank is never left holding the bag.
From the article: Employees of crypto companies are not "normal" bank customers. Recent history shows that there is a significant risk that they may deposit commingled funds from their employer, which (a) puts the bank at risk for huge money-laundering fines, and (b) puts it at additional risk (I think?) if the crypto company fails.
If you have a credit score of 300 and complain about not being able to get a mortgage, I won't have a lot of sympathy. If your employment history is spotty and you're not a full-time employee, I might have more sympathy but I'll still understand why it would be hard to get a loan.
It turns out that if you work for a crypto company, you're a bigger risk to the bank than someone with bad credit is to a mortgage lender, as the possible losses are far higher than the amount of money they'd ever make off of you, and the fraction of crypto companies that have gone down that route is uncomfortably high. Oh well.
BTW, Walmart charges $4 to cash checks less than $1000, and $8 for $1000-$5000. If Grandma's check is $200 or less, it will cost $6. Your local post office will sell you a money order (up to $1000) for about $3, and you can get prepaid credit cards to pay online bills at your local 7-11, again for prices in the single digits.
That pretty much depend on country. Here in Europe, it is common to pay online by bank transfers, not by payment cards.
There's quite a lot of variance across the country of Europe.
Bank transfers are indeed common but implying that payment cards are not is a bit of a misnomer - and the (buyer) protection offered by the card networks is much higher.
I guess my point is, that even in Europe, accepting only Bank transfers is going to limit your client base fairly significantly and to a sizeable number of people will be considered a signal of how much they can trust the vendor.
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You don't deserve to be down voted for your comment, because what you wrote is true. Depending on what kind of product you're selling online, you can expect about half of Europeans to pay by card and half by bank wire, if given both options.
Removing the ability to pay by card, I'd estimate the business would lose a substantial share of clients, maybe in the range of 25%.
> Here in Europe, it is common to pay online by bank transfers, not by payment cards.
UK here. I pay my window cleaner and my tree surgeon by a bank transfer (from my bank's phone app app). If I buy a thing or service online or in a shop I pay using a credit card. It's almost unheard for medium to large companies to offer their bank details for a transfer.
You missed the point, banks have costs, banks are companies, banks must be profitable otherwise they collapse, crypto is very expensive to bank, banks have difficulty making profits on funds sourced from crypto, a responsible business you must prioritise (queens English) profitable customers.
My understanding is that crypto is expensive to banks because crypto is expensive to any legal entity in general.
And crypto kings not being able to hold their coins in their bank account doesn't sound like "debanking" to me, because it never was banked in the first place (some banks sure did handle it, but not the ones they're crying about).
I also can't get my bank to hold my beany babies either, and nobody calls that being debanked.
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This bit is downright scary: "the bank cannot explain why SARs [Suspicious activity reports] triggered a debanking, because disclosing the existence of a SAR is illegal. 12 CFR 21.11(k) Yes, it is the law in the United States that a private non-court, in possession of a memo written by a non-intelligence analyst, cannot describe the nature of the non-accusation the memo makes. Nor can it confirm or deny the existence of the memo."
I get why this is insane but I also get why the law is there which leaves me in a wired spot. Part of me wants to say something along the lines of "make SAR's disclosable / viewable to American citizens or legitimate users" but you can't really do that because the bad guys will quickly exploit any escape hatches like this.
What do others think about this? Because I'm kinda stuck in the middle about them.
If there is evidence against you, you surely have the right to know of it and to contest it! That's pretty fundamental to any reasonable justice system.
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You’ve stipulated that the debanking was ok but that not disclosing why was problematic?
How about this:
1. Corporations are highly regulated legal constructs. Being given an extraordinary right (immunity for shareholders) they should be expected to return significant value to society. I propose that value should be “lack of freedom of association” - eg I don’t think corporations should be allowed to stop doing business with, or refuse to do business with, anyone citizen, except after conviction in a court of law for behavior directly related to that business.
2. Government should not be able to use their secret monitoring to prevent anyone from doing anything. No lists, secret orders, etc. If government wants someone debanked, take it to court.
Finally, if corporations can’t debank people, how do they handle unusual cost/risk? With pricing, of course. If porn and crypto transactions pose extraordinary financial risk, then allow pricing based on actual financial risk.
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The middle ground seems to be allowing SARs (which are analogous to tips to police officers), but not requiring banks keep them secret from the customer. The bank could decide to do so, but also could decide not to, like any other speech.
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You should see the rules about discussing SARs you are asked to respond to, as an employee of a bank, with your colleagues and managers...
When a case is brought to court, they have to outline the methods used to determine the perpetrator. Why is it okay to do that for things like murder and other crimes but not for banks?
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The law seems to be punishing people based on secret judgements over sealed "non-accusations".
Sorry, but no, I can't see why a country would want a law like this.
Honestly, my country had a dictator impose a Constitution that made sure every person had access to banks over 200 years ago (we haven't had a democracy at that point, but nobody even discussed it since, because nobody disagrees). I also can't understand how come the US treats that system so frivolously.
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> What do others think about this?
Stop with the Al Capone, totally dumb, angle: instead of arresting him for his actual crime, they arrested him because he didn't pay his taxes. Something dumb like that. And everybody applauds as if it was so brilliant. It's not.
What I think is: arrest people for the actual crime they commit... and leave honest people the fuck alone.
Of course it is scary. This is totalitarianism plain and simple. Secret laws. Secret rules. All these do exist (not necessarily only for SARs, where the law is not necessarily secret) when they definitely should not.
The excuse "(but) This is very much the law." isn't much of an excuse.
Last I checked the numbers estimated that, worldwide, KYC/AML costs on business where more than $180 bn while only $12 bn of funds were frozen. And frozen do not mean confiscated: a part of these are unfrozen and rightfully returned to their owners.
So that whole totalitarian, dystopian, system is a gigantic net loss.
And for what? To please bureaucrats who can do nothing else but push papers, create laws and rules and put ever more burden on everybody else.
But the worse of it all is that it gives a perfectly valid excuse for banks to debank anyone they don't like: seen that they don't need to justify anything they can just say "we're sorry we cannot say anything".
Wait, no, that's not the worst of it all. In several countries in the EU like France and Belgium the local IRSes do basically run ads explaining how you can denounce your neighbor.
I've heard a number floating in floating (devs in charge of these systems do talk): 25% of all the self-employed people have had at least one SAR.
On my LinkedIn I see people proudly posting 3rd-reich stuff like "The previous chief compliance officer said there were weeks where they had zero SAR". Basically implying that the previous dude was not filling enough reports and that he was so happy to get the job so that he could run those numbers up.
Burn that entire system. Just burn it to the ground.
There is no moral justification to freezing the bank accounts of truckers in Canada.
I don't care that "this is the law". Laws should be about justice.
This has absolutely nothing to do with being just.
How does that not violate the due process clause? It's pretty clear they're acting "under color" of the state.
"No person shall ... be deprived of life, liberty, or property, without due process of law"
A SAR does not deprive you of life, liberty or property.
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Due process is related to legal proceedings - this is a commercial relationship.
I have a friend that is constantly being debanked and his wires getting lost because he has the same name as politically exposed Russian person.
Banks do not negotiate. They just kick him off and sometimes even lose his money.
There is nothing he can do, even though everyone who would look the issue would figure out it's just a shitty automatic system flagging it because of an unrelated person 's name. It would cost too much time and money for banks to fix this mistake, so giving a boot is cheaper.
Sounds like a big inconvenience, did he try to change his legal name?
Edit: I have no idea why this legitimate question is being down voted. I'm not suggesting that he should change his name or even that such a solution is an acceptable state of affairs. And the replies received re:past names are furthering discussion.
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I’m surprised there is no redress number like for plane flights.
What's more: if you exhibit knowledge of the SAR requirement to a banker, they're supposed to file a SAR on you just for this, even if nothing else about your transaction trips the SAR threshold.
Absolutely, it's one of the most undemocratic, potentially violative of 1st amendment laws that is out there.
This is from the point of view that money laundering as a law is essentially thoughtcrime. The police state has done an orwellian job of normalizing not privacy, but instead telling the government the reason you are doing every transaction. Then, any attempt to not tell the government is "money laundering".
Of course, if you are the state, the powers of this tool are alluring. Imagine if the state could compel citizens to write down what they're thinking, and compel justifications for everything they do in life. Think of how many crimes we could solve! Think of how many bad folks we can catch ahead of time!
> ...is essentially thoughtcrime > The police state has done an orwellian job... > Then, any attempt to not tell the government is "money laundering".
Exactly.
But the really most shocking is the number of people that'll find excuses for such a dystopian system.
Now of course very few bite the hand that feeds them: when you literally work on software facilitating the handling of SARs, you need to do post-fact rationalization of your acts and life choices.
I hope the new administration burns that profoundly nightmarish system to the ground.
I don’t think anything was truly debunked here. Debanking is indeed a side-effect of AML laws and regulators, but as the article highlights, these laws are largely ineffective at stopping actual money launderers. Meanwhile, the vast majority of debanked customers are innocent. AML laws should be repealed entirely. Law enforcement should do their job and investigate crimes, rather than outsourcing this responsibility to financial institutions and effectively forcing them to be the "judge, jury, and executioner."
> these laws are largely ineffective at stopping actual money launderers.
Let's think about what the purpose of money laundering laws is. Nobody really cares about people concealing the source of their income in the general case. There's no purpose for money laundering laws just for that purpose alone.
The reason that money laundering laws exist is that one way to discover and prosecute crimes that people actually care about (human trafficking, drug dealing, various kinds of fraud, terrorism) is to "follow the money", and if criminals can successfully launder their money, it makes it easier to get away with their criminal activity.
The second reason that it exists is that money laundering _itself_ is often a much easier crime to prosecute than the underlying offense is. What KYC and AML laws do, and are extremely successful at is _not_ preventing money laundering. That would actually be undesirable for prosecutors! What KYC and AML laws do is allow people to money launder while creating a wonderful paper trail for prosecutors to follow and build a case on when they take an interest in someone from crimes they actually do care about. Chances are if you are money laundering, you have at some point lied on a banking form, which is a prosecutable crime, and a lot easier to prosecute than drug dealing and other crimes are, sometimes.
> these laws are largely ineffective at stopping actual money launderers
Money laundering could be the "think about the children" relying cry of the financial world. If international entities want better control over financial exchanges and a window into people's money, playing the money laundering card is a guarantee to get it passed without having to justify it that much.
The degree to which it has affected regular/everyday banking is pretty astounding, and is probably exactly what the regulators wanted from the start.
> Money laundering could be the "think about the children"
My hyper-liberatrianism is showing, but I've always been slightly irritated with money "laundering" being a crime in the first place. It's pretty far removed from the actual harm: money laundering is illegal because drugs are illegal and drugs are illegal because when people do drugs they do things that actually cause harm (to others and themselves). Like... I get the cause-and-effect chain there, but there's no evidence that these laws help anyway and they definitely hurt.
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I didn't read the article but I do agree with you completely. I've noticed this repeatedly where if I've to move a small sum of money in/out of my country I need to fill 20 letters and 50 if it's a business. But if I have to move say $100MM? Banks will roll out a red carpet, no questions asked.
If it's left to the banks they are all too happy to serve anyone with money, we have quite a few examples[1] of that. Regulators want banks make examples of anyone which banks do by harassing small businesses which won't have monetary impact to banks' bottomline. My gut feeling is even regulators don't care much, they just want to pretend to the voters that they are trying to do something, anything.
[1] https://www.icij.org/investigations/fincen-files/hsbc-moved-...
[1] https://en.wikipedia.org/wiki/World_Jewish_Congress_lawsuit_...
> if I have to move say $100MM? Banks will roll out a red carpet, no questions asked
What are you basing this on? Every nine-figure wire I've seen issued was far more involved to get authorised than anything sub-million. (For obvious fucking reasons.)
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More HN bullshit! Please explain the first 10-25 letters, then we will judge!
>Law enforcement should do their job and investigate crimes, rather than outsourcing this responsibility to financial institutions and effectively forcing them to be the "judge, jury, and executioner."
Think there have being big pressure from banks and financial institutions to centralize power. AML laws seems just a way for the regulators to do it.
Banks and financial institutions see AML as a necessary cost center to continue operating as a business. They would gladly fire 90% of their compliance department if they didn't have to write hourly memos to FinCEN and join conference calls with the Fed. Power and money correlate, but money is ultimately what does the talking.
> pressure .. to centralize power
Social law and order rests upon consent of the governed.
Social contracts are abrogated when legal power is hijacked.
Indirection of motive via narrative, math or physics is not consent.
> these laws are largely ineffective at stopping actual money launderers
This is a non-goal. Taking it at face value is extremely naïve, and no one in the fintech world thinks this way.
AML laws exist solely for the purpose of enforcing the American grip on the world's politics via financial means.
What about Europe/Japan/Australia/NZ? They don't care about AML? This is really a stretch.
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Yep. AML and KYC laws are unconstitutional.
>This is not the world you live in. [A world where people get debanked for political reasons.]
I know quite a few people, and entities affected by it in Europe. Some of them even personally, individual accounts, not just their companies and organizations. I would elaborate, except I suspect that will be counter productive. Please read site guidelines. Let's agree to disagree.
The idea that the debanking of individuals on political basis has only happened in Canada is wrong. Furthermore, this also only happens to, let's say one side of the political dialogue.
That blog has a lot of choice quotes along the same lines. Another favorite:
https://www.bitsaboutmoney.com/archive/money-laundering-and-...
> This [KYC/AML] will affect the typical user of the financial system precisely zero times during their lives.
I've been affected by this nonsense, and so have friends and family. Quite inconvenient when you're trying to buy a house and trying to keep things moving on time. I may not be "typical" but my mother certainly is. I can tell that patio11 is highly invested in the finance industry, not wanting to burn bridges, and I think he is incentivized to try to make people believe that KYC is beneficial and highly effective, but it's just not the case. It reminds me of the people inside Google working on their auto-banning systems who won't admit that it doesn't always work perfectly.
Per the article:
"Debanking will also not infrequently swiftly cascade to accounts in the same household, regardless of title (non-specialists can round this to “name on the account”; industry can’t). Banks institutionally consider those accounts in the same household to be highly likely to be under common control, regardless of what paperwork, account holders, or politically influential subcultures believe."
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Same here. I think one must be occupying very nice couch in a nice house in a 1-tier country to say that AML/KYC doesn't affect 'typical' users
If people have actually read the article, they will have spotted the bits where patio11 himself has been adversely affected by this at least twice!
> I think he is incentivized to try to make people believe that KYC is beneficial and highly effective
I don't think the article is arguing that at all. It's describing the "system", not endorsing it (and explicitly complaining about it in several places).
If nothing else having to do more paperwork is very common.
British banks tend to not open accounts for people abroad because of the cost of KYC, and they even close accounts if you move abroad. Difficult if you have assets or a pension in the UK but live abroad. As you say, it makes it very hard for people who move around.
There are definitely political biases in closing bank accounts in the UK, and many cases of accounts being closed because banks did not like someone's politics. Not even fringe political views, associations with the previous government's part has caused problems in some cases, and definitely association with smaller but significant parties.
People also avoid taking on jobs that might make them "politically exposed persons" because the rules are too broad, and that (although it affects only a few people) does a great deal of damage because it reduces the number of people from outside in organisations, which worsens governance and corruption.
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Also happening in Japan. Quite a number of big-name vendors like DMM, DLsite, and others are getting heavy pressure from Visa and Mastercard to censor certain merchandise for no justifiable reason (as in no legal basis) and in some cases have been blacklisted outright.
The Japanese response, and this is after placating the first round of censor demands, has been to reverse-blacklist Visa and Mastercard because Japan realized that giving an inch only means they will then demand a mile, then a league, and so on.
I feel like you are omitting the content that visa and mastercard find particularly objectionable that is commonplace in japan but not elsewhere.
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Classic HN bullshit:
Zero evidence provided. Zero examples provided.
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We live in a society. There were a bunch of pedos in the Netherlands who tried to start a political party to change age of consent. It did not go well for them.
The middle class and below live paycheck to paycheck so that's an issue they don't have. I suppose the author refers to this (ironically or not)
But debanking happens, or has happened, to _almost_ everybody who has some assets and cash, probably from the higher middle class until the ~1% .. as for the super wealthy, this class enjoys offshore private banking, has assets split into dozens of accounts and is mostly unbothered by AML.
> debanking happens, or has happened, to _almost_ everybody who has some assets and cash
I don't think this is true. I know many people with assets and as far as I know, none of them has been debanked. Surely I would know someone who has been debanked if almost everybody with assets has been.
You need to provide data behind your claim that debanking is so widespread as to use the word almost everybody.
Never ever heard any person I know being denied banking services, except for some unlucky (were they?) entrepreneur with very shady is-he-laundering-money situations.
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> The middle class and below live paycheck to paycheck so that's an issue they don't have.
You mean they answer surveys saying they do, according to surveys published in press releases from payday lenders.
They also answer surveys from the Fed saying they have median $8k in bank accounts and that they can pay 3 months of expenses in cash.
These two things are contradictory.
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> But debanking happens, or has happened, to _almost_ everybody who has some assets and cash, probably from the higher middle class until the ~1%
Can you back up this claim? The wealthier you are the less chance you're going to be debanked. Marc Andressen and all the crypto bros will never have an issue with debanking. Banks are rolling out the red carpet for him and everyone else with his net worth.
What they (1%) want is to own the bank and own (and create) the currency without ever having to be an actual bank. They invest in crypto to make a massive profit, and it's foolish to play along with these things as some sort of benefit to society. Together these guys could end world hunger and still have more money than they would ever need, but no, they've decided VBucks are a pressing issue.
I too know of such people in Europe. Including people in perfectly legal industries, and refugees from war torm countries.
Banks are a necessary evil, but evil all the same.
Very true, happened twice to an acquaintance of mine.
[dead]
It's interesting that the idea that 'banks should refuse to do business with potential terrorists' is something that most people I know support, or don't care about.
Until it happens to them. Then suddenly they get quite passionate about the state that the world is currently in.
I don't have data on how many people are being debanked, but anecdotally it definitely seems to be some kind of 'line go up' number, and I wonder if cumulatively it will get to some kind of critical mass where we have a large enough percentage of people make enough noise that the laws are reigned in, or if they'll be 'that group of weirdos' forever.
(I almost got debanked once -- I had my account re-instated after many weeks of extreme stress https://news.ycombinator.com/item?id=37925678)
> It's interesting that the idea that 'banks should refuse to do business with potential terrorists' is something that most people I know support, or don't care about.
I tell them about the "terrorists" truckers who went on strike in Canada and who got debanked for going on strike.
> (I almost got debanked once -- I had my account re-instated after many weeks of extreme stress ...
You tell me. I had to fill nearly a PDF with nearly 50 pages justifying where and how I bought groceries and how I put tank in my car because they somehow thought I may not be living in the country I said I was living in.
Same things: weeks of insane stress but, eventually, they said things were OK.
You're not a weirdo. People don't realize we live in a Brave New World, complete with secret ESG score (assigned by banks to customers), etc.
Many simply have blind love for the state and they'll never question any rule made by the state.
So they'll state: "But banks are only following the law!". Which is precisely the problem: such laws shouldn't exist.
I live in a country where it's all about banking finance and most don't realize they don't produce anything at all. It's all about KYC/AML/compliance/SARs/fiscal lawyers/etc. A big, gigantic, void.
While you see SpaceX going from their Raptor 1 design to their Raptor 3 design, using the "idiot index", where things become more efficient and way cheaper, bureaucracy (and their banking following dogs) works the other way: everything becomes less efficient and more costly.
all of the laws meant for terrorists are being applied to normal citizens at an astounding rate, things like border crossings and these unconstitutional laws like the patriot act have really undermined people's rights
A few years ago in Russia, when protesting was still barely legal and possible, prominent opposition leaders were 'fined' for ~1M USD each for damages to businesses what happened due to some protest activity. Banks simply deduced every account balance by -50000000,00 RUB and have a nice day.
Whoever thinks that 'but that was bad, evil Putin's government and our nice, good government would never do such a thing' should think again. The government should not have such power at all, neither directly, nor via bank proxy that would 'independently' refuse you service.
When you happily cheer that in EU you can't pay with 500 EUR bill (because tax evasion, crime, etc!!!), you are basically helping the government create means to financially strangle anyone the government doesn't like. One day it might strangle you.
How could they not have the power? All power the banks have is directly derived from their ability to operate as they do within a currency regime that is directly controlled by the state. Best case is it's your state; plenty operate in a system controlled by a foreign state.
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And terrorist is a word created to deny enemy combatant a PoW status because we said so.
Everyone is a "potential terrorist". Actual criminals are people who are tried and convicted of crimes. Everyone else is, by definition, innocent.
> ... [debanking] often gets conflated with declining to open an account for a person or a business ...
A reasonable perspective. But the obvious follow up is what one pithy word should be used to describe this activity? The proffered terms (offboarding, derisking) are being suggested by the industry with an obvious political motive to minimise the significance of what they are doing.
There is an ongoing war against the pornography industry that has been waged in part through payment processing. The entire thing is an intense mish-mash of poverty, wealth, politics, drama, technology and major social forces clashing with each other. It isn't appropriate to talk about that sort of action in bland terms. There is an attempt being made to sculpt society by leveraging the financial system. The implementation details of that isn't "offboarding" or "derisking" - it is much more in the spirit of a word like "debanking".
I'm with the activists on this one. It makes more sense to redefine the word debanking to cover politically motivated (or even motivated by business-logic) denial of a bank account. These are not bland administrative decisions.
What's the point of this windy article? An allusion to "debanking people is OK actually!"
Allowing the bank remove your financial lifeline via some opaque and kafkaesque process where you have zero recourse is not OK and we should not tolerate it.
This is specifically a response to Andreessen conflating crypto offboarding with "debanking" on Rogan. The goal is to inform you about the regulatory and political environment around banking and crypto in general, and to warn you to be wary when a crypto investor uses terms like "debanking" to rally favor for their cause, which is to integrate crypto into the banking sector.
The point is that reality is more complicated than short statements (which often embed political assumptions) can express, and understanding the reality of the situation is useful, especially to people who want to change the system.
There are many banks out there that aggressively complete.
This is a valid point. Banks should compete for customers by providing value. They should also be free to decline customers to ensure quality. However, debanking due to perceived or real regulatory risk is ultimately a political act. The banks may not be exclusively political actors, but they are incentivized to act outside of market concerns by state pressure.
Similarly, one of the alleged intentions of the cryptocurrency movement was to decouple the state from monetary control.
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there's really only a small number of banks in the US after the 2008 crash, they were all consolidated. what used to be thousands became like 3
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> An allusion to "debanking people is OK actually!"
Literally the opposite of what he says. He says it happens too often to too many people, and that mostly it happens to people who are immigrants or don't speak english well or are financially illiterate, or just generally people at the margins, and not to privileged crypto bros.
>>> An allusion to "debanking people is OK actually!"
>Literally the opposite of what he says.
In that case the message is lost in the wall of text.
> What's the point of this windy article?
Ah, I had the same reaction (https://news.ycombinator.com/item?id=42387392).
Seems like an article meant to distract, or a someone nerding off on the nuances with no solutions offered.
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> any form of "political debanking" — where financial services are withdrawn or denied based on political beliefs or expression is completely unacceptable
RTFA. He goes into great detail around how someone naive can conclude they were disconnected based on political beliefs when in reality it's something mundane or stupid. Misdiagnosing the problem as political debanking entrenches the problem.
We have a problem with access to financial services, particularly for small businesses. But it won't be solved (except for crypto) if it's branded as political debanking.
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Debanking isn't unique to the USA either.
In the UK, there is no concept of "universal service". if you look dodgy, your bank account can be closed. However unless there is strong evidence of fraud, you should be able to get your assets back, assuming that you can find a bank to take you.
But
Its more often the most vulnerable that cannot get bank accounts. If you have no fixed address, then you are not able to have a bank account.
If you work in stuff that looks like a prude to be sex work, you are also extremely vulnerable.
so yes, its great that this might be looked at in the USA, it won't however get reform, because its a very powerful and useful tool for the an administration to pull on when it wants to exert pressure.
>In the UK, there is no concept of "universal service".
The nine largest banks have a legal duty to provide a bank account to any eligible applicant under Part 4 of the Payment Accounts Regulations 2015, except where providing an account would be unlawful under other legislation (fraud, money laundering and terrorist financing) or where the customer has engaged in harassment against the bank's employees.
https://www.legislation.gov.uk/uksi/2015/2038/part/4
>If you have no fixed address, then you are not able to have a bank account.
The above legislation applies to customers with no fixed address. Two banks offer products specifically for customers with no proof of identity and no fixed address. Many others have significant flexibility in their identity and address requirements.
https://england.shelter.org.uk/professional_resources/no_fix...
Alas my edit time has ran out, otherwise I would update with your correction.
Thank you for correcting me with sources, it is appreciated.
The People I know who have no fixed address, told me how difficult it was to get an account. I know when I opened my account recently, I had to provide a whole host of information that wouldn't be possible to have if I was homeless. I made the mistake of projecting incorrect assumptions, confidently. I went full techbro, which is wrong of me.
In the Muslim community, we have a phrase for the phenomenon of many of us getting debanked: "Banking while Muslim"[0][1]. LaunchGood was debanked a few years ago and really had to struggle to survive[2][3].
My own startup was threatened to be kicked off Stripe with just 24 hours of notice. It took an exhausting effort and connections with employees inside Stripe to escalate our case to get our case re-reviewed. Google Payments for the Play Store halted payment processing randomly and sent me a message demanding to get copies of my passport and other details. When I sent it, they said they'd respond in 72-96 hours and just came back saying they needed the same document again even after I sent it. This repeated several times. Every time I contacted them, they came back with an automated response saying that they'd look at my message. After I asked for escalation to an account specialist, the specialist said they'd get back to me in 96 hours. That situation also took escalations with friends at Google to get sorted out in the end, but not until we spent two weeks churning subscribers and losing revenue.
[0]: https://ispu.org/banking-while-muslim/
[1]: https://twitter.com/search?q=%23bankingwhilemuslim&src=typed...
[2]: https://www.thefp.com/p/debanking-america-melania-barron-tru...
[3]: https://web.archive.org/web/20190430201629/https://tinylette...
I was debanked by a California bank for selling holsters, a product that is legal nationwide and protected under the Constitution. While the bank has the right to choose its business relationships, it’s concerning to see decisions driven by political positions. This sets a troubling precedent for the direction we might be heading as a country.
I'm sure that the Bakersfield regional credit union would have a different idea about the bankability.
it should have been a central point of the election, it's crazy that this only came out afterwards. we need a basic right to our own banking with due process
The PEP part of the Rogan interview was when I understood Andreessen was most likely bullshitting. Funny how this is not clearly stated, most likely because of who Andreessen is.
I wonder why Andreessen needs to use disinformation to shape opinion if the actual problem is so bad? I find it very unlikely that he does not know how PEP actually works.
It is so demonstrably false. Anyone who has worked in an finance adjacent industry likely knows the definition of a PEP.
Seems to me that he has crypto-related goals but involves more people to gain political support. The OP article's last paragraphs make it quite clear IMO.
what was BS about it specifically? people were in fact getting debanked, outside of crypto too
It is explained in the article.
The concept of Politically Exposed Person has nothing to do with views in US politics.
It’s really about foreign officials and their families. And, in spirit, it’s really about officials from countries with high corruption risks.
And Andreessen knows it. That’s the bullshit.
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His argument seems to boil down to a the financial regulator equivalent of the trolley problem.
In Operation Choke Point, the regulators were actively moving the lever to debank morally repentant industries. In "Operation Choke Point 2.0", the complex system of regulatory guidelines and actors seemingly self-coordinates to debank crypto, and the failure of anyone to intercede is painted as a willful neglect. Those on the regulator side say, "I didn't do anything", and those on the crypto side say, "you have every power to do something".
The point is that Operation Choke Point was an actual operation, but Operation Choke Point 2.0 is not; it’s just a label that someone started using to try to generate sympathy for their private business goals.
And a smart reader should recognize the difference and adjust their reaction accordingly.
Seems to me that what Andreessen was really mad about was the CFPB forcing his portfolio companies that committed consumer fraud to return money to their customers. He also lied about the CFPB doing debanking, they don’t have that power.
While debanking may be a problem, there’s a false populism in these disingenuous VCs, pretending that their troubles are the same as everyone else. These guys want to operate in grey areas that enable laundering, illegal gambling, buying/selling contraband, and straight up rug pulls, and not be subject to any risk or oversight.
I used to respect patio11's opinions, and obviously he has a lot of valuable knowledge and there are things to learn from him, but some of his takes on crypto have led me to heavily discount his writings on the topic.
On the face of it, this writeup is reasonable.
I'm a crypto founder, and I struggle with banking. We've had two banking applications rejected in Singapore.
Here's the thing: we're not doing anything remotely like what Patrick describes. I think he strawmans a lot.
We're a crypto-focused IT consultancy, but closely affiliated with an upcoming blockchain. The business is set up to be super boring: we bill the client for work and that's it. The company doesn't handle a token, doesn't get revenue from onchain activities, ... The blockchain in question is not anymore risky than any other and in many ways less. Not that the banks know or ass.
They just say "you're rejected and we can't tell you why".
Now this is Singapore, not the US. It's not a targeted plan but just general policies: "crypto is potentially bothersome for us, let's not bother". In the meantime we don't have a bank account. Though I do believe US attitudes and (lack of) regulation probably impact these policies a fair deal.
I’m one of the few people who can truly say I’ve built a bank from scratch—starting as a single individual in a small office and eventually obtaining a full banking license in one of the most highly regulated financial environments in the world, Australia.
I invited Marc Andreessen for a conversation on X (formerly Twitter), after the Joe Rogan interview. It is no surprise I didn’t receive a response when he’s one of the wealthiest and most influential figures in tech, and I’m certainly not even the richest person on my street.
At its core, a bank’s business model is straightforward: you act as a caretaker for depositors’ money. Your primary obligation is always to ensure that depositors can withdraw their funds in full, whenever they need them, within the terms of the contract. Profitability is achieved by carefully managing risk—both in holding deposits and lending them out—while making sure that, at all costs, you can make every depositor whole.
In practice, this means thoroughly understanding and mitigating risks. To do so means we identify every possible scenario, assess its likelihood and potential impact, plan how we’d mitigate the risk, and determine the residual exposure. Our regulators then review this work, probing relentlessly, testing our assumptions against extreme hypotheticals: floods knocking out our data center, hackers encrypting our backups, simultaneous runs on accounts associated with crypto exchanges—every remote yet plausible crisis is considered. We then refine and repeat this cycle until the regulators are satisfied we understand every angle of our risk profile.
Every mitigation strategy we implement has a cost—whether it’s the liquidity we must set aside or the capital reserves we are required to hold. If the regulator believes any exposure is excessive, the bank must increase its capital buffers, making the business more resilient but also more capital-intensive.
From a traditional perspective, stable term deposits or mortgages are ideal for banks. They’re long-term, predictable, and well-understood, with minimal servicing costs. In contrast, servicing the crypto industry poses unique challenges. While there can be mutual benefits, the costs and constraints imposed by regulatory and liquidity requirements often clash with the crypto sector’s expectations.
Ultimately, it’s a cost/benefit analysis. Crypto-related accounts tend to require holding large liquidity buffers, limiting profitability. Banks must maintain extremely high-quality liquid assets because these crypto accounts can be called upon at any time, as they are generally setup as an on-ramp or off-ramp for the exchanges' customers. If a bank is required to hold 100% of those deposits in liquid form just to meet potential instant demand, the profitability of such relationships diminishes. Once you factor in operational overhead, compliance, and the capital required to ensure depositor safety, the margins shrink even more.
Capital adequacy is another critical complication. The bank must have sufficient Tier 1 capital to cover all depositors in the event of a collapse. This includes provisioning for winding up the bank and ensuring depositors remain whole even if certain assets become illiquid. The instability and occasional outright fraud we’ve seen in the crypto domain (e.g., the FTX/SBF scandal) means that funds could vanish or become tied up. As a result, banks often need to raise even more capital or reduce shareholder dividends. This is costly, and that cost must be considered in pricing and strategic decisions.
Finally, the operational and compliance costs associated with handling crypto transactions—from specialised staff to advanced monitoring systems—can be prohibitively high.
The reality is that the associated liquidity, capital, and operational requirements often make it an expensive proposition with limited upside for the bank. At the end of the day, the bank must always ensure depositors are protected, and that priority imposes constraints that may not align with the crypto industry’s expectations.
I guess it is surprising that crypto service providers cannot come to an agreement with banks by just paying more money for the service or by implementing some rules for their users which would allow some portion of their bank deposits to be held in slightly less cash-like assets.
It's more than just money: A payment processor is not all that different from a crypto exchange in their relationship with the bank: It's a very special company that can bring real risk to the banks underneath, so they have to do a lot of regulatory work internally to keep working together. The Stripes and Adyens of the world spend efforts in regulatory because they have to keep the bank happy, but they find those efforts just cost money, not harm the actual goals of the business.
Many of the crypto services believe that no, there's no way they'll do what the bank tells them and still remain useful to their clients. They'd have to compete with the truly off-the-regulatory-world competitors, and probably lose a lot of business there. So they get unbanked, in the same way that I'd get un-bared if I decided to keep showing up at said bar with the same clothes as Donald Duck.
I think one of Patrick's points is that the real cost to the bank for providing these services to crypto companies is more than the entire profits of the crypto companies. So there is no mutually agreeable meeting point.
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Maybe that's why Coinbase charges such high fees.
America's new dictator in chief is all in on crypto.
My opinion is that crypto leads to instability, corruption and tax evasion which is why they all got kicked out of China but good luck.
Given all the rightfully angry comments and descriptions in here about how easily megacorp banks and financial institutions can debank people on a whim with next to zero recourse, one wonders why nothing like some sort of cryptoraphically generated, decentralized token ecosystem doesn't exist by which people can send each other usable monetary value rapidly and via many avenues that are difficult to block...
We could call it, crypto... currency, maybe?
Wouldn't it be nice of something like this existed, at least as an option for those who don't live in bubbles of never having been the financial rape victims of a large bank, government or formal regulatory algorithmic system.
Estimated reading time: 134–170 minutes
Definitely not a casual Monday evening digest.
I think this was his best article yet - it lays out all the various things that have been conflated under "debanking" - some justifiable, some less so.
I have no idea where Patio11 sits politically, but as someone who tends right I would say it was a fair description of political debanking (and social media deplatforming), if North America-focussed.
And I think it would be fair to characterise Patio11 as a crypto-sceptic.
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I don't feel like the article is particularly in favor of or against debanking in general. (I think in fact that his position as stated is that debanking in general is bad unless it's against people he doesn't like, which is a position held by literally everybody.) Rather, it's an examination of why debanking exists in general and why "bank everyone you're allowed to" isn't the dominant strategy, what factors go into influencing politically-driven debanking, and whether or not the current argument made by cryptocurrency advocates that "we are being debanked for political reasons" is true or not. It concludes that while crypto is being debanked (or equivalently but less provocatively, banks are declining to create new relations with them), it's primarily because crypto has historically been bad for banks. This in turn has created a(n arguably political) culture among those who decide who shall be banked or debanked to not service their industry. In other words, crypto isn't being debanked because people morally disagree with them per se, but because crypto is simply extremely risky
tl;dr of the tl;dr: the article is primarily about systems around debanking and only secondarily about whether or not crypto is being debanked (conclusion: it is and it's not necessarily for political reasons)
The main problem with the article is that, while patio is a very knowledgeable and even insightful writer, he has an extremely indirect writing style. It almost feels like a math textbook that describes "here's the properties of this mathematical construct; you can immediately see it has these properties" without explaining the connection to the other mathematical constructs that give it these properties. In his defense though, his writing is a more gradual progression between "here's a thing" and "here's the implications of the thing" than a typical math textbook. But he still doesn't explicitly point out the connections, which means you have to expend a lot of brain power to hold enough things in your head at once to make those connections yourself, which is exhausting. Part of that is because the connections are social connections that are far less clear, defined, and observable than typical STEM systems, and he doesn't want to ever tell you or imply to you anything incorrect. Contrast this to Matt Levine who will gladly tell you how a social system works in a step-by-step list, followed by how the example he's about to write about completely breaks that system
Even his tweets are often indecipherable...
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> debanking in general is bad unless it's against people he doesn't like, which is a position held by literally everybody
I don't hold this position. Should I?
Jeez, had the article been any more drawn out we could have connected them to a publisher.
The implication that Libra was killed by a letter from 2 U.S. Senators is hilarious. That’s not how businesses make major decisions.
A public letter from a couple Senators is not a leading indicator of a regulatory problem. Individual Senators have essentially zero regulatory power whatsoever.
It is a trailing indicator of a PR problem. The Hill staffer he quotes is trying to point this out, but Patrick misses it. Perhaps he does not have the personal experience to understand this aspect of what Congress does (unlike the regs he covers earlier in the article, which he clearly has working knowledge of).
If you are debanked can you not sue for defamation and slander? After all, only criminals and terrorists get debanked, and if that's happening to me that's a public statement by a public corporation.
There is also the problem of punitive action (debanking) upon suspicion of wrong-doing rather than the conviction of it, which is a violation of due process on the side of the government.
andreesen's comments on JRE basically said this:
there was no way to sue because the banks were debanking anyone involved in crypto as a "politically exposed person". this was a regulation forced on the banks by the federal government. any bank not following this policy would then be caught under a million internal investigations by the feds, which is excruciatingly painful for them. as such, the banks weren't liable for following procedures, and the feds weren't "responsible" for it as they were very passive aggressive in writing and enforcing rules in such a way that didn't expose them. it wasn't said openly but it was deeply assumed with an undertone meant to circumvent the law. the politically exposed thing had been done prior with gun manufacturers and weed dispensaries so it had some kind of precedence
he described it as a puppet with no master above the strings
i completely agree that's it's 100% illegal, but there were a number of people who apparently had this same problem yet had no real legal recourse. i don't fully understand it but i assume a bunch of well off founders would have been able to figure it out. their only solution was to apparently support trump because it was so heavily tied to the left wing establishment.
Incredibly informative write-up. I consider myself much more banking-industry literate than most, and I learned a lot.
In the US, there's not a lot (other than a chunk of cash and lots of regulations) to stop a private individual or group from starting their own bank.
In the past, large companies and high net worth individuals did just that.
Why is this article so longwinded? I understand that there are nuances to every subject but does the article it give clear solutions if one is 'debanked'?
The article’s refusal to acknowledge that there might be viewpoint discrimination going on makes it feel like the author is trying to do a Jedi mind trick.
Bleah this post was overly wordy by 10X and so meandering it was really hard to read. I gave up after 15 mins and realized I was only 1/3 of the way through. My suggestion to the author is to break this up into smaller essays and be more succinct with less meandering.
What's infuriating to me about this article is that bank "supervision," makes banks a direct proxy for policy via nominally private bodies but without any public accountability.
Well regulated banking is a national asset and source of soft power internationally, and having a bunch of anxious de-bankers at the controls is a hollowing out of the common wealth of the society as a whole.
Another perspective from Europe:
In Germany the political climate is so bad that the domestic intelligence publicly confirms on social media that they have person so and so on their radar. This had no consequences. Let that sink in. In such a climate it's sometimes enough to publicly scold a bank on social media to have blogger XY as their customer to trigger debanking. In one case, some blogger called a politician "fat", which caused the FBI equivalent to request the bank account history from the bloggers bank, which ultimately caused debanking.
So in Germany it's used more Stasi like, meaning protection of the government. They changed the objective so that the scope of the domestic intelligence is no longer groups of people who want to overthrow the system, but also individuals that "deligitimize the government and it's representatives". That is, criticism about the Covid measures can put you on the radar of domestic intelligence. An independent left wing journalist did a FOIA request and found out she's on the radar because of just that.
A perfect climate for debanking measures and some hint on what is going on with Germany in case you wonder...
> which caused the FBI equivalent to request the bank account history from the bloggers bank, which ultimately caused debanking.
I don’t know which person you have in mind but the situation in Europe can’t be directly compared since you have a right to a bank account. You _cannot_ be debanked. You have a right to a “base account” (under some conditions).
Debanking to me doesn't just mean "no bank account". It starts with closing of accounts without being given a reason and the constant fear that any new account will be closed as well. For businesses this has even bigger implications.
You a right: There is base account meant for refugees, homeless people, indebted people... This is nothing more than a safety net for when you are at the bottom of society. You can't do business with it etc... If someone where to be forced to register such an account because all banks closed the normal accounts without giving a reason, I'd still consider it debanked.
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I am sorry but the OP is writing a lengthy article to legitimize his claim?
Here is the point, as I see it and it is very simple: If having a bank account is a requirement to operate legally, a bank can NOT refuse any customer unless they have been barred by a court. It doesn't matter whether you are selling crypto, weed, porn or socks.
This is done in France, and many other countries by the way. The bank has an obligation to service, as your life's obligations requires such a bank account.
Pat went on a dozens of pages of non-sense to avoid this particular point explaining how the banking system work, the bank obligations and other crap. It's just a bunch of filler non-sense that doesn't address the core point.
That doesn't make any sense. As the article points out, it's akin to saying that a lender must loan to you unless they've been barred by a court. The accounts you are thinking about are all, under the hood, lines of credit, even though they don't look like that.
> The accounts you are thinking about are all, under the hood, lines of credit, even though they don't look like that.
You present this statement as though it's an immutable law of nature, rather than a design feature of the US banking system that allows them to offer an excuse for closing accounts that's convenient for those banks. (The fact that someone on HN can read about it and feel smart because they think they understood the deep reality that lesser people don't get is also a convenient design feature).
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No, it's not akin to that. You can live without loans but you can't leave without a debit bank account.
As the parent points out there's indeed such a law in France but from personal experience I can tell that it doesn't prevent the bank from closing your account without an explanation (the explanation I was given off-record was my citizenship). The law merely forces the bank to open you an account which can later be closed. So definitely the right direction but IMO not far enough.
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Since the Fed is the provider of the liquidity and also sets the rules on what is a collateral and what is not, I say yes, the bank must loan you the money as long as you satisfy the conditions of the loan.
The bank is roughly a re-seller of the Fed liquidity. They shouldn't be an arbiter of who gets to access that liquidity but rather an administrative entity that follows the rules.
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It makes perfect sense because of the very bloody obvious point that your account isn't really a line of credit since you gave a full deposit equal to the funds you have available. If the bank wants to lend your money around as part of its fractional reserve process, that's their business, but opening an account with funds you expect to have access to at any time is not the same as asking for a loan. Please.
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It definitely happens for political reasons. Let's be honest here, this is a completely one-sided hunt. And it's the next step in provoking war of retaliation amongst a political populous from an establishment that's losing power. It's disgusting.
Anyone should be able to have a political opinion or open a crypto business without needing to worry about the sanctity of their bank accounts. Let's just all agree this is abhorrent behavior and to stop this immediately. It's happening all across the west and it needs to just stop. Political competitions should be fair, not insidious.
Wouldn't your argument be far more defensible if it wasn't dripping with a siege mentality and provocative, yet unfalsifiable claims? Youre a step away from claiming that the children yearn for the mines.
it happens in europe, canada, and did in the US, so it's not just not unfalsifiable, it's provably true.
it's definitely not a siege mentality to say "let's treat each other fairly despite political differences". i don't know what you mean, the rest is nonsense
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Why is the linked post so long?
This is a very strange read. My initial feeling was that it was an awful lot of verbal gesticulation aimed at simple gaslighting. Having read most of it at this point it almost reads like it's trying to confirm the hypothesis while saying it's doing the opposite. I really dunno what to make of the piece, but it's kind of an exhausting read.
I think you are exactly right. patio11 both wants to communicate a point and also understands that communicating certain points can lead to really bad outcomes for you and your family. Thus he often writes that way about topics where powerful individuals might wish to harm him for his opinions. Such is the way the world really works, regardless of whatever naive people were taught in school about freedom of expression. “If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him.”
We need a good name for this style of writing.
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As always, he moves the cup so flashily for so long that you forget that you never saw him put the ball under it in the first place. If you take it as read that Binance (the largest threat to his business interests) really are evil, then of course destroying any bank willing to serve them is perfectly justified.
I also love the impersonal gloss over the actions of all the bank employees, as though all the Operation Choke Point crimes were carried out by machines directed by the politicians and regulators, and not humans making the choice to be Quislings. Look at the quote from Zuckerberg where he expresses regret for the poor choices he and his company made, and note the conspicuous absence of anyone doing the same from the banking/finance industry.
Those of us who've been paying attention are not hearing about debanking for the first time now, we've been banging this drum for years. In a country with the US' asset forfeiture laws, denial of banking service is de facto denial of the human right to own property. The current situation in the US is shameful, and while part of that shame should fall on the politicians and regulators, much of it rightly falls on the banks themselves. (Nor is it that an alternative is impractical. The UK made it legally obligatory for banks to offer "basic bank accounts" to everyone in 2016, and the sky has not fallen).
I have no love for the crypto people, but they're fighting for the right thing here (whether they're doing so out of good motives or bad) and I hope they succeed.
> The UK made it legally obligatory for banks to offer "basic bank accounts" to everyone in 2016, and the sky has not fallen).
This did not avoid https://en.wikipedia.org/wiki/Nigel_Farage_Coutts_bank_scand...
However there's a vital layer of ambiguity in that story which made it more confusing for everyone involved: Coutts is a long standing "private bank" which makes a point of not serving everyone, only HNWIs, and Farage fell into both the "not rich enough" and "too politically exposed" categories.
> The current situation in the US is shameful, and while part of that shame should fall on the politicians and regulators, much of it rightly falls on the banks themselves
Like the lack of consumer protection and public safety in the US, at some point you have to accept that the public are also ultimately responsible through the ballot box. US financial control systems are driven firstly by the catch-all "war on terror", which since 9/11 has been used to justify any and all authoritarianism with public support, war on drugs ditto (despite state level legalization!), and thirdly evangelical support for Operation Choke Point.
The Farage situation hardly applies as an example, if at all.
From the linked Wikipedia page:
> NatWest, the owner of Coutts, initially claimed that he failed to meet the Coutts eligibility criteria of holding £1,000,000 or more in his account, following the expiry of his mortgage. NatWest instead offered him an account with the retail side of the bank.
So it's hardly a case of debanking a random Joe. It was only a higher-end account that was closed for not keeping the requirements for keeping it, and Farage was offered a normal account.
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> This did not avoid https://en.wikipedia.org/wiki/Nigel_Farage_Coutts_bank_scand...
I almost wrote about that case, but my post was getting long enough already. He was denied the fancy account he had and offered a basic account. Obviously you can have concerns about that (and note that this was a scandal, and ultimately brought down that bank's CEO), but it's certainly orders of magnitude less bad than being denied access to the banking system entirely.
> at some point you have to accept that the public are also ultimately responsible through the ballot box
Up to a point. Abusing some small minority is a well known failure mode of democracy, especially if you can paint that minority as bad people. And arguing that the public shouldn't be outraged about this because the public obviously approved of it is circular and backwards. Who do you even vote for to express outrage at debanking? It seems like the sort of thing that the CFPB should be stepping in to stop, so you vote D, but if you believe what the article wants you to believe (you shouldn't) then the problem is FINCEN so maybe you vote R and hope they dismantle it? IDK, flip a coin?
So you are saying that a private company, i.e. the bank must service the crypto industry even though it is going to mean they will suffer massive losses in doing so?
See my explanation of why it is an extremely costly venture for banks.
My position is that banks (which are not "private companies" as normally understood, but heavily regulated entities whose status already involves a complex bundle of special rights and special obligations) should be obliged to provide basic banking to any legally operating individual or business, just as they are already obliged to offer various services that they probably would not if they had a free choice.
If they are unable to figure out a way to provide basic banking without extending credit in the way patio11 describes then this will of course be extremely costly for them, but I suspect they would figure out a way to not have to extend credit rather quickly (hint: look at what banks in virtually any other country do) if they actually tried. If not - i.e. if the current price of banking is only sustainable when banks are permitted to arbitrarily refuse service - then I guess prices will have to rise to something similar to what they are in countries where banks already have those kind of service obligations. Again, that doesn't sound like such a terrible fate.
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Not familiar with the UK version, but these kinds of regulations usually apply to personal bank accounts and do not require extending any credit. So you'd only get a basic bank account that cannot be overdrawn, nothing more.
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The cost is here due to AML regulation. If government wants to outsource its duties (crime intercepting) to banks, then perhaps it should be government to pay for it (in the similar manner it pays telecoms for wiretapping).
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> Look at the quote from Zuckerberg where he expresses regret for the poor choices he and his company made
I'm sure Zuckerberg does have regrets, but I think it's a mistake to assume they align with actual human interest except by coincidence. The state of Facebook today, and for many years before, has nothing to do with any honest concern for human welfare, however misguided.
> and not humans making the choice to be Quislings
What is with the obsession with calling people quislings? Have all the nationalists transferred their hyper-patriotism to more socially acceptable targets, instead of just learning not to be like that?
If it's a current trend then, much like with complaining about debanking, it's one that I was years ahead of the curve on. Humans should not blindly follow orders, and that you were following orders from the legitimate authorities does not absolve you of responsibility for your choices.
It's dehumanizing language that encourages violence.
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Like everything related to politics it's about plausible deniability.
The founding fathers sold their ideas as freedom from the tyranny of the crown. While this was true, they probably didn't care as much for the freedom of the average Joe, but their own freedom and that of their rich friends. They just needed the freedom of the average Joe to get the masses on board without blatantly lying about their actual goals.
The rich people of crypto see themselves similarly, selling their ideas as freedom from the tyranny of traditional finance; and they have a point: There are millions of average people out there who suffer by the hand of financial institutions. However, the goal of the crypto "elite" is mainly the freedom of their own and their rich friends, they just need the freedom of the average Joe to get the masses on board.
Now, the only thing left to argue is if the rich people from back in the days had a better case against the crown as the rich people from today have against traditional finance.
>denial of banking service is de facto denial of the human right to own property.
Is property ownership a 'human right', or a 'human privilege' (nod to George Carlin)?
It's literally in the UN declaration, and widely accepted as a basic right. If some philosopher thinks there is some sense in which it isn't a right, so much the worse for their philosophy.
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All rights are unnatural. Therefore “we” get to collectively agree on what rights all people ought to be granted.
I believe almost anywhere you go you’ll find that most people agree to consider property ownership to be a basic right.
For the benefit of people who come to the comments first: If you want a comprehensive debunking or substantiation of the claims about crypto debanking, then this is not the place to go.
If you want to read 23,000 words on banking regulation, its uses, abuses, the incentives faced by both the banks and their watchmen, and an explanation for how we ended up where we are, then go ahead and jump into it. Personally, I think the latter is far more useful than the former. I enjoyed it, at least.
Bear with me; the free market seems to think that history isn't a very useful area of study, and lots of people agree. At least some of this probably comes from bad experiences with history classes. I like to think of history instruction as having three levels. The lowest level - the one you'll hear people complaining the most about - is presenting history as a dry series of facts. At it's worst, the entire course can be reduced to a hashmap; event -> date. Rinse, repeat.
The second layer presents history as a narrative. Most people like stories, so this is much more compelling, and makes it a lot easier to enjoy history. But the highest level of teaching is about systems. It's not enough to colorfully explain that King so-and-so was furious at the offense given by King the-other-one. You have to try to make students understand the world that these two kings existed in; how things as small as calling 9th-century European polities "countries" can disastrously mis-callibrate our models. Once you understand the system that someone is working in, you can hope to understand them, and why they do the things they do. Once you have that, you can hope to pass reasonable judgement on their actions.
This article is all about systems and tradeoffs. It is aspiring to that third level. The title is arguably a little bit misleading, but I think it accomplishes it's goal, and personally, I feel like I've come away with a reasonable overall understanding of his thesis, and I think it matches the title.
I think it's one of his better pieces and in some way a culmination of a lot of things he's been writing about; I think he's counting on people to actually read his previous posts about why e.g. business bank accounts are functionally credit products, not the financial equivalent of water and electric service, and it really helps if you understand some of those details.
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Bad summary.
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I assume Kayne found another bank, just like patio11 did after he got debanked. Those stories aren't that interesting. The juicy cases are when no bank will deal with someone.
The right-wing false-victimhood ragebait narrative of the "Debanking" non-scandal is the story. It's ragebait propaganda and has no place on HN.
Debanking is part of the culture war now, which means that someone's reaction to it shows that they're either on the right or on the left, with no positions in between allowed, and that therefore they also support all the other culture war positions of their chosen side. The culture war is designed to bundle positions together like this, and to force issues into the bundle, in order to foster an us-versus-them feeling about every issue. It's possible to recognize this is happening, attempt to analyze the issue and the merits of each side of the argument, and come to a conclusion that one side or the other has the better argument. It's difficult though to convince others that your position is not because of culture war dynamics because the design of the culture war is to minimize independent analysis.
I think that debanking is absolutely a right wing false victimhood propaganda narrative, but I'm still interested in why they think it's an issue, partly in order to engage in the argument and defeat it based on facts, and partly to continue to learn the foundations for their side of the culture war in general
>The culture war is designed to bundle positions together like this
Designed by whom? Do you have evidence?
People whose business is effectively a grift should not be offered banking services, both as a moral issue and as a good business decision.
Right-wingers are far more likely to be grifters.
So right-wingers are more likely to be debanked but correlation is not...yadda yadda.
The tech industry was a lot cooler back when it was mostly graybeard hippies and not a bunch of incel adjacent techbros who never grew out of their Ayn Rand idolization phase.