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Crypto

Federal Reserve Ends Reputational Risk Policy Seen as Barrier to Crypto Growth

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Key Insights:

  • The Federal Reserve takes a step to eliminate the reputational risk factor from the bank supervisory framework.
  • Policy change addresses how regulators assess banking relationships with digital asset companies.
  • Adjustment focuses on supervisory criteria rather than cryptocurrency prices or market performance.
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Federal Reserve Ends Reputational Risk Policy Seen as Barrier to Crypto Growth

The Federal Reserve has taken a step toward removing the “reputational risk” factor from its policy framework, according to statements shared by market observers and a U.S. senator. The development centers on how regulators assess banking relationships with digital asset companies. Notably, several industry figures described the move as significant for cryptocurrency firms seeking access to banking services.

Federal Reserve Policy Adjustment

The update was first surfaced by Pete Rizzo, who reported that the Federal Reserve moved to eliminate the reputational risk component that had affected Bitcoin and crypto companies. According to the post, regulators previously considered reputational risk when supervising banks serving digital asset firms.

Reputational risk refers to concerns that a bank’s associations could harm its public standing. However, critics argued that the factor limited banking access for crypto businesses. The development specifically addresses how banks evaluate relationships with digital asset clients.

Reaction From Senator Cynthia Lummis

Following the report, Senator Cynthia Lummis responded publicly to the Federal Reserve’s action. She stated that the Fed should not determine outcomes for banking digital asset companies through reputational assessments. Lummis connected the move to broader debates over regulatory treatment of crypto firms.

Additionally, Lummis referenced what she described as Operation Chokepoint 2.0 in her remarks, indicating that removing reputational risk from policy would formally end that practice. Her comments focused on the regulatory structure surrounding digital asset businesses and banking access.

Context Around Digital Asset Banking

As the discussion continued, observers linked the policy step to ongoing scrutiny of banking access for cryptocurrency companies. The reputational risk had served as one factor in supervisory reviews. Therefore, its removal could alter how regulators approach bank-crypto relationships.

Meanwhile, both Pete Rizzo and Senator Lummis framed the development as a structural regulatory adjustment. Their statements centered on the Federal Reserve’s role in supervising banks that serve digital asset clients. The reported policy change remains focused on supervisory criteria rather than market performance or price movements.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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