US President Donald Trump has ordered regulators to investigate the alleged refusal among US banks to supply accounts to customers on the basis of their political or religious beliefs.

In an executive order signed Thursday, Trump accused federal banking regulators of presiding over an unlawful discrimination campaign under the guise of risk management, echoing allegations levelled previously by members of conservative groups and the cryptocurrency sector.

“Bank regulators have used supervisory scrutiny and other influence over regulated banks to direct or otherwise encourage politicized or unlawful debanking activities,” the order states. “Such practices are incompatible with a free society and the principle that the provision of banking services should be based on material, measurable and justifiable risks.”

The order requires banking regulators to conduct an investigation into instances of politically motivated discrimination. If banks are found to have discriminated in this manner, regulators are to levy fines, consent decrees and other unspecified “disciplinary measures,” the executive order states.

To prevent similar alleged discrimination recurring in future, the order also demands that regulators disallow banks from considering “reputation risk” when fielding applications from prospective customers.

In anticipation of this measure, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC), the regulatory agencies responsible for the stability of the US banking system, had already moved to drop reputation risk as a component of their examination processes.

The order is the latest in a series of steps taken by Republicans since Trump returned to office to end the alleged discrimination by banks.

In February, congressional subcommittees held multiple hearings on the topic of debanking. The following month, Republican members of the Senate sponsored the FIRM Act – which has not yet been put to a vote – aiming to prohibit banks from factoring in “reputation risk” when making decisions about customers.

Trump has also appointed Jonathan Gould, former counsel to crypto firm Bitfury, as head of the OCC, and long-time regulator Travis Hill as acting chairman of the board of directors of the FDIC.

Although the executive order does not refer explicitly to crypto, it has been interpreted in corners of the industry, which has formed a profitable alliance with Trump of late, as a long overdue concession to its own banking struggles.

For years, the crypto industry has complained about US banks refusing to provide them with loans and checking accounts. Without a US bank account, crypto firms cannot readily accept dollars in exchange for services, store and earn interest on funds raised from investors, pay employees or vendors or perform other fundamental business activities.

In early 2023, following the lead of crypto venture capitalist Nic Carter, industry figures began to allege foul play. Under the Biden administration, they claimed, the Federal Reserve, FDIC and OCC pressured banks into refusing to serve the crypto industry. They did so by issuing informal guidance, thereby skirting the public consultation process required to instate formal policy, crypto figures have alleged.

Carter termed this alleged discrimination campaign Operation Chokepoint 2.0, in reference to an Obama-era antifraud programme under, which US officials reportedly discouraged banks from dealing with pornography, payday lending and other disfavoured industries. On the campaign trail ahead of the 2024 presidential election, Trump adopted the terminology himself.

“I’m glad the Trump administration is taking up this fight and I hope they can create a framework for fairer banking overall,” says Carter.

The FDIC and Federal Reserve declined to comment.

“It is unacceptable for banks to discriminate against customers or prospective customers based on political or religious beliefs,” says Gould, comptroller of the currency at the OCC. “I intend to assess the size and scope of this problem and take appropriate action to depoliticize the federal banking system, and ensure banks provide fair access to financial services as required by law.”

In an interview with CNBC on Tuesday, Trump claimed to have experienced debanking first-hand: Both Bank of America and JP Morgan Chase, he alleged, have previously either withdrawn accounts or refused to accept his deposits. “The banks discriminated against me very badly,” Trump claimed.

“We don’t close accounts for political reasons and we agree with President Trump that regulatory change is desperately needed,” says Patricia Wexler, managing director of corporate communications at JP Morgan. The Bank of America declined to comment but pointed to a subsequent interview in which its CEO Brian Moynihan, said, “We bank everybody.”

According to Donald Trump Jr, the banks’ behaviour helped to awaken the Trump family to the supposed promise of crypto, as the basis for a parallel financial system in which everybody has custody over their own funds. “We got into crypto not because it was, like, hey this is the next cool thing. We got into it out of necessity,” he told CNBC in June.

Since Trump’s return to the White House, crypto companies are already finding it easier to secure accounts with US banks, as previously reported. But while the recent vibe shift is welcome, there remain questions about the practicalities of enforcing the executive order – and potential unwanted side effects tied to restricting the terms on which a bank may decline to serve a customer.

“Simply demanding that banks provide services to all clients is not workable because banks should be allowed discretion over whom they serve,” says Carter. “The challenge is to install a supervisory regime that allows banks the discretion to derisk unprofitable or risky clients through the ordinary course of their business while ending the practice of debanking clients because of their politics.”

One step towards achieving that, Carter proposes, might be to pare back the doctrine of “confidential supervisory information,” under which banks are prevented from disclosing to the public the details of certain discussions with their regulators.

“Despite Swan getting debanked in 2022 with no explanation and no recourse, I believe in the right of private enterprises, even banks, to assess risk and decide who they want to do business with,” says Cory Klippsten, CEO at bitcoin services company Swan Bitcoin. “This looks more like political theatre and payback for crypto campaign donations than a real attempt to solve the problem.”

The White House declined to comment.

The crypto industry can only be confident of its long-term security in the US market once its access to banking has been enshrined in law, beyond an executive order that could be readily rescinded by a future administration.

“Even though there is a more friendly administration in place at the moment, there still hasn’t been anything codified into law,” said Azeem Khan, founder of crypto start-up Miden, speaking to WIRED earlier in the year. “[We need] new laws that allow us to be sure the pendulum won’t swing based on who is sitting in the chair.”

• A Tell Media report / Adapted from Wired agency