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The Federal Reserve opened public comment on removing “reputation risk” from supervision.
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The proposal aims to prevent banks from debanking lawful businesses.
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Crypto firms have long argued reputation risk fueled account closures.
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The change would formalize a policy clarification issued in 2025.
Addressing Debanking Concerns
The Federal Reserve has proposed permanently removing “reputation risk” from its supervisory framework for banks.
The change builds on a 2025 clarification that examiners should not penalize banks for serving customers engaged in lawful but politically sensitive industries, including crypto firms.
Vice Chair for Supervision Michelle Bowman said the Fed had heard troubling cases where banks were pressured to close accounts based on reputational concerns rather than financial risk.
Operation Choke Point Debate
Crypto executives and some lawmakers have referred to past supervisory pressure as “Operation Choke Point 2.0,” alleging coordinated efforts to restrict banking access to digital asset firms.
Senator Cynthia Lummis publicly supported the proposal, arguing that regulators should not act as gatekeepers for lawful crypto businesses.
If finalized, the rule would codify that supervisory decisions must be grounded in material financial risk, not reputational considerations. Public comments are open for 60 days.
