On Thursday, the Office of the Comptroller of the Currency finalized its Fair Access to Financial Services rule, which will prevent banks from refusing to serve entire classes of customers that they find politically or morally unsavory. The rule is a huge win for civil liberties, and for the many sectors who have found themselves in the bad graces of corporate financial services, like cryptocurrency projects, marijuana businesses, sex worker advocacy groups, and others.
For years, financial intermediaries have engaged in financial censorship, shutting down accounts in order to censor legal speech. For example, banks have refused to serve entire industries on the basis of political disagreement, and other financial intermediaries have cut off access to financial services for independent booksellers, social networks, and whistleblower websites, even when these websites are engaged in First Amendment-protected speech.
For the organizations losing access to financial services, this censorship can disrupt operations and, in some cases, have existential consequences. For that reason, financial censorship can affect free expression. As just one example, in Backpage.com, LLC v. Dart, a county sheriff embarked on a campaign to crush a website by demanding that payment processors prohibit the use of their credit cards to purchase ads on the site. The Seventh Circuit court of appeals held that the sheriff’s conduct violated the First Amendment and noted that the sheriff had attacked the website “not by litigation but instead by suffocation, depriving the company of ad revenues by scaring off its payments-service providers.” As EFF explained in our amicus brief in that case, “[like] access to Internet connectivity, access to the financial system is a necessary precondition for the operations of nearly every other Internet intermediary, including content hosts and platforms. The structure of the electronic payment economy . . . make these payment systems a natural choke point for controlling online content.” In that case, the Seventh Circuit analogized shutting down financial services to “killing a person by cutting off his oxygen supply rather than by shooting him.”
Innovators in the cryptocurrency space are all too familiar with these problems. For years, they have struggled to access basic financial services—regardless of how successful, promising, or financially sound the particular company is. The Blockchain Association highlighted this problem in its comments supporting the OCC’s new rule, noting that in some cases individuals working at legal U.S. cryptocurrency businesses have been denied personal banking services because of their employment. The difficulty in accessing these financial services has been a huge barrier for cryptocurrency entrepreneurs, whose time and energy would be better spent innovating rather than trying to figure out how to get a bank account.
The OCC’s new rule will help address this. It will limit the ability of certain financial institutions like large, national banks to categorically refuse service to a class of customers. Under the new rule, banks will still be empowered to refuse to serve certain customers, but must use individual, quantifiable, customer-by-customer risk assessment, rather than refusing to serve an entire industry. We hope that, under this regulation, historically underserved businesses will be able to access the financial services they need, and won’t lose their financial lifelines solely based on the whims and subjective moral standards of bank executives.
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