Trump Set to Penalize Banks for Political ‘Debanking’

- President Trump will issue an executive order targeting politically or religiously motivated service terminations by banks. - The directive will also eliminate "reputational risk" from regulatory guidance, a category critics say unfairly hinders cryptocurrency companies. On August 7, 2025, Bloomberg reported that U.S. President Donald Trump will sign an executive order requiring federal banking regulators to penalize institutions that unlawfully deny or end banking services for political or religious reasons. In addition, the directive eliminates "reputational risk" as a basis for regulatory actions, a criterion that critics assert has been used unfairly against industries like cryptocurrency. The executive order will also mandate that regulators investigate past and current policies that may have encouraged discrimination. Following these investigations, regulators could penalize financial institutions that violated fair lending and consumer protection laws. Through these actions, the administration aims to ensure equal access to financial services and target perceived biases in the regulatory system. This move comes amid rising tensions between traditional banks and the cryptocurrency industry. In late July and early August 2025, U.S. banking associations began lobbying the Office of the Comptroller of the Currency (OCC). They urged the OCC to block banking license applications from firms like Ripple and Circle, arguing these companies present transparency and legal challenges. If regulators grant approval, these crypto firms could enjoy the advantages of traditional banking while following their own industry's rules, which could escalate competition between the two sectors. Ripple and Circle recently applied to the OCC for national trust bank charters as part of their broader effort to integrate into the traditional financial system and expand their services. Both companies aim to manage stablecoin reserves directly under federal oversight and will also comply with new rules from the GENIUS Act, which President Trump signed into law on July 18, 2025. This legislation requires stablecoin issuers to follow strict asset backing and anti-money laundering rules. According to market data on August 7 at 18:09 UTC, XRP (XRP) traded at $3.051, reflecting a 1.31% increase in its 24-hour trading volume. At the same time, USD Coin (USDC) was priced at $1.00, showing a 0.007% change.