Fed scraps adverse crypto rule: sector is celebrating victory

After years of frustration, the American crypto sector finally sees light at the end of the tunnel. The Federal Reserve (FED) has decided that supervisors are no longer allowed to take ‘reputation risk’ into account when checking banks. A vague term, which, according to critics, was used for years to keep crypto companies outside the banking system.

Crypto back in the picture with banks?

Reputation risk was central to Operation ChokePoint 2.0, an informal policy in which dozens of technology and crypto companies from bank services were excluded. Those companies simply did not receive a bank account, purely because of their image. Especially after the fall of crypto-friendly banks such as Silvergate and Signature, that policy was visible.

That now seems a thing of the past. The FED states that from now on supervisors must focus on specific financial risks. Reputation may no longer play a role in this. “This makes supervision more fair and clearer,” says Rob Nichols of the American Bankers Association.

The term disappears from all internal documents. In addition, supervisors are being trained again, so that the new policy throughout the country is applied immediately. Banks themselves are still allowed to determine how heavily they consider reputation in their own risk policy.

Political support from the crypto corner

The crypto sector reacted pleasantly. Senator Cynthia Lummis, a well -known advocate of Bitcoin (BTC), called it “a victory.” According to her, reputation risk was abused to consciously work against innovative companies. “But there is more work to do,” she wrote on X.

The decision does not come from nowhere. More and more American authorities are celebrating the reins around Crypto. For example, banks have recently been allowed to trade digital assets on behalf of customers, or outsource those tasks. Banks also no longer have to request separate permission for crypto activities.

Not everyone is reassured

Yet there is also criticism. Opponents fear that scrapping reputation risk will open the door for risky players. Without that buffer, according to them, it becomes more difficult to overcome ethical or social risks – with all the consequences that that entails.

In any case, it is a step forward for the crypto sector. After years of blockages, there seems to be room for fair access to the American banking system.