Solana Projects Respond to Increasing Debanking Concerns in Crypto
Marc Andreessen discussed on The Joe Rogan Experience that 30 founders from a16z’s portfolio faced arbitrary bank account closures, prompting criticism of the US banking system from crypto figures. This renewed focus on debanking has fueled interest in alternative banking solutions on Solana, where projects aim to attract the debanked and unbanked. The success of these alternatives compared to previous attempts remains uncertain.
Following the podcast, Shimon Newman from Squads Labs began researching a report on a perceived conspiracy against crypto entrepreneurs, termed Operation Chokepoint 2.0. The report indicates that US regulators associate significant risks with crypto, leading to numerous debankings, although specific data on crypto-related debankings is limited.
The report references data showing only 0.1% of laundered money is intercepted by anti-money laundering efforts, and less than 1% of crypto volume is illicit. Despite the crackdown, Squads is adapting by offering a smart wallet app that provides a “virtual US bank account” for low-fee transfers and stablecoin conversions, without credit services like loans.
Iron is developing an “onchain bank” on Solana, focusing on stablecoin benefits rather than debanking issues. CFX Labs promotes “rebanking,” allowing tokenized USD deposits to operate alongside traditional banking. Serj Korj, co-founder of DePlan, launched Subdoor for crypto subscription payments and acknowledged the larger issue of global unbanked populations.
The narrative criticizing opaque banks has gained traction but is not new. Historical context suggests regulatory support is essential for any transformation of banking through crypto. Some industry players believe the debanking narrative has already run its course.
Cavet stated, “Debanking is a year old story. And fintech eye rolls because it’s a 10 year old story.”