Federal Reserve Cuts Reputational Risk Category In Win For Crypto

The US Federal Reserve said that it ordered its supervisors not to take into account the “reputation risk” that crypto industry has long claimed to be used to unfair targeting and debank crypt companies.

The industry considered risky faces significant challenges in establishing or maintaining banking relations, and it was obvious that they control the so -called. Chokepoint 2.0 surgery When there were more than 30 technological and crypt companies denied bank service in the USA.

Monday in a statement Federal Reserve Council said He began to review and remove links to reputation and reputation risk from his supervisory materials and replace them with “more specific discussions” about financial risk.

At the same time, the Council plans to train the examiner and ensure that the change is carried out consistently across banks under his supervision, and at the same time cooperate with other federal regulatory agencies to support consistent procedures.

Banks will still need risk management procedures

Despite the change of the Federal Reserve Council, it said that it still expected that banks will maintain strong risk management that comply with all laws and regulations.

Also, this change is not “intended to influence whether and how the banks observed by the Council use the concept of reputation risk in their own risk management practices”.

Federal reserve a defined risk of reputation As a potential that negative publicity concerning the business practices of the institution, whether true or not, will cause a decline in customer base, costly litigation or reducing income.

Blessing for crypto and banking

American Senator Cynthia Lummis said The aggressive policy of the risk of reputation “murdered American Bitcoin and digital assets” adds that “This is victory, but is even more work.”

Rob Nichols, President and CEO of the Bank Lobby Group Group American Bankers Association, also applauds The decision in its statement says: “The change will make the process of supervising more transparent and consistent.”

“We have long believed that banks should be able to make business decisions on the basis of caution of risk and free market, not for individual perspectives of regulatory bodies,” he added.

But critics said Removing the risk of reputation could cover non -financial problems, affect the stability of the bank, weaken supervision and potentially risky banking procedures.