The United States Federal Reserve moved to eradicate reputational risk as part of its examination program for banks, opting instead to replace the term with more specific financial risk discussions, according to a Monday release.
The move aims to provide clearer guidelines for banking supervision. It could also free up banks to serve digital asset firms and other crypto industry participants who have decried “debanking” as a hindrance to large-scale crypto adoption in the U.S.
“The formal rating is intended to highlight and incorporate both the quantitative and qualitative aspects of an examiner’s review of an institution’s overall process for identifying, measuring, monitoring, and controlling risk and to facilitate appropriate follow-up action,” the Board of Governors of the Federal Reserve System said in a letter on Monday.
“This change does not alter the Board’s expectation that banks maintain strong risk management to ensure safety and soundness and compliance with law and regulation nor is it intended to impact whether and how Board-supervised banks use the concept of reputational risk in their own risk management practices,” the board added.
Regarding the Federal Reserve’s move, pro-crypto Wyoming Senator Cynthia Lummis said in a social media post that “This is a win, but there is still more work to be done.”
The Federal Reserve joins the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) in removing to end reputational risk examinations for banks. Senate Banking Committee Chair Tim Scott also introduced a bill aiming to prevent reputational risk as a component of bank supervision in March, The Block previously reported.
“Debanking” is when a bank terminates accounts deemed risky, such as with extreme political affiliations or high likelihood for fraud. Crypto industry leaders have long complained about the difficulty of forging and maintaining banking relationships.
However, this state of affairs was escalated following the collapse of FTX, when national banking regulators and the Biden administration appear to have purposefully targeted the digital asset industry and encouraged financial institutions to cut ties with crypto clients in a campaign dubbed “Operation Chokepoint 2.0” by Castle Island Ventures co-founder Nic Carter.
In March, President Donald Trump alleged that the Biden administration “strong-armed banks into closing the accounts of crypto businesses and entrepreneurs, effectively blocking some money transfers to and from exchanges, and they weaponized government against the entire industry.”
The Block reached out to the Federal Reserve for comment.
© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Trade Crypto On Coinhub Exchange
Trade Crypto On Coinhub Exchange
Stay ahead of the market by turning news insights into trading opportunities. With Coinhub Exchange, you can seamlessly buy, sell, and manage your digital assets, all in one secure platform. Take advantage of real-time market insights, deep liquidity, and fast execution for your favorite cryptocurrencies. Don’t just read about it — trade crypto now!
Disclaimer
The content of this article shown by Coinhub News, powered by The Block, is for informational purposes only and should not be construed as financial, legal, tax, or investment advice. Coinhub News and its affiliates are not a licensed financial advisor, legal advisor, broker, or tax advisor, and ... should not be considered as professional advice or a recommendation to engage in any specific investment, legal decision, or financial transaction. Cryptocurrency markets are highly speculative and volatile. Readers should perform their own independent research and consult with a qualified professional before making any financial or legal decisions. The opinions expressed in this article are those of the author and do not necessarily represent the views or opinions of the Company of its affiliates. Additionally, the Company does not make any representations or warranties regarding the accuracy, timeliness, reliability, or completeness of any information in this article. By accessing this content, you acknowledge that any reliance on the information contained in this article is solely at your own risk. The Company is not responsible for any financial losses, legal disputes, or other damages that may arise from reliance on this content or from any investment or legal decisions based on the information provided. Investing in cryptocurrencies involves substantial risks, including the risk of losing your entire investment, and you should carefully consider whether it is appropriate for your circumstances.
Read more
